Recto: It’s high time to lower income tax bracket, rates-A A +A
Saturday, March 8, 2014
SENATE President Pro Tempore Ralph Recto said Saturday that it is high time for the country to adjust individual tax brackets and rates to reflect the inflationary effects since 1997 when the present tax brackets were imposed.
Recto said that when the present individual tax brackets and rates were imposed in 1997, the cost of goods was half than what it is now.
"The Consumer Price Index from 1998 to May 2013 almost doubled. The basket of goods costing P100 in 1998 was worth P196 in May last year," he said.
He said Section 24 of the National Internal Revenue Code of 1997 should be amended to reflect the erosion in the value of money.
Current tax rates, based on annual net taxable income, meaning after deductions are as follows:
Below P10,000 5 %
P10,000 to not over P30,000 P500 + 10% in excess of P20,000
P30,000 to not over P70,000 P2,500 + 15% in excess of P30,000
P70,000 to not over P140,000 P8,500 +20% in excess of P70,000
P140,000 to not over P250,000 P22,500 +25% in excess of P140,000
P 250,000 to not over P500,000 P50,000 +30% in excess of P250,000
P500,000 and up P125,000 + 32% in excess of P500,000
Recto is batting for a new schedule that would impose no tax on net income of below P20,000.
For a net taxable income of below P60,000, a tax of 10 percent; 15 percent for P60,000 to not over P140,000; 20 percent for P140,000 to not over P280,000; 25 percent for P280,000 to not over P500,000; 30 percent for P500,000 to not over P1,000,000.
He said his proposed tax rates can still be lowered if studies will show that government can absorb the foregone revenues.
"In reality, we can lower the rates further, but in lawmaking, we have to veto-proof our proposals. The political reality is that eventually the final call is with the executive branch so we're putting forward a set of proposal that they’ll find hard to veto," he said.
Recto welcomed the statement of Bureau of Internal Revenue chief Kim Henares that the agency will draft its own proposal.
"Coming from Commissioner Henares, that’s a great leap forward," Senator Ralph Recto said.
Recto said the Senate is looking forward to receiving what Henares described in a TV interview as BIR's "holistic study" on the matter.
"When it is ready, I hope it would come to us with a presidential certification that is an urgent measure," Recto said.
While the BIR is preparing its position, Recto said the Senate will continue "calling hearings and running some numbers on how to adjust income tax rates which were pegged 17 years ago."
Senate ways and means committee chairperson Senator Juan Edgardo Angara last week heard various tax break bills designed to recalibrate income tax brackets and rates.
Discussed during the said hearing were Recto's Senate Bill (SB) 716, Angara's SB 2149, and Senator Bam Aquino's SB 1942. (Camille P. Balagtas/Sunnex)