Monday, September 14, 2015

Lower income tax rates? Aquino 'not convinced' it's good idea

See - Lower income tax rates? Aquino 'not convinced' it's good idea

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MANILA, Philippines – President Benigno Aquino III is not yet convinced that lowering income tax rates will benefit the majority, stressing the government's thrust of improving tax collection.

It was reported on September 3 that the Palace rejected a House bill that seeks to lower income tax rates in the country. The goverment is estimated to lose at least P30 billion ($641.49 million) during the first year of its implementation. (READ: Palace: No new or higher taxes, income tax cuts)
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Marikina Representative and committee chairman Romero Federico “Miro” Quimbo earlier said the House bill on lowering income tax would have 4 brackets, which include:

* Workers earning less than P180,000 ($3,850.13) a year would be exempted from paying income taxes
*Workers earning P180,000 ($3,850.13) to P500,000 ($10,695.64) would pay a tax rate of 9%
* Those earning between P500,001 ($10,695.64) to P10 million ($213,901.29) a year would have a tax rate of 17%
* Those earning more than P10 million ($213,830.76) would pay a 30% income tax

*Quimbo said corporate taxes would be reduced to 25%.

For progressive taxation
Aquino stressed that through prudent measures, the deficit has been managed, lowering it in proportion or as a ratio to the country's gross domestic product.
For this, various credit rating agencies gave the country positive investment grades under his watch, Aquino said.
"Ang tanong, kapag binawasan natin ‘yung income tax, mababawasan ‘yung revenue, lalaki ‘yung deficit. Iyong paglaki ba ng deficit magiging negative factorkapag ni-rate sa atin o ni-rate tayo nitong mga credit ratings agencies?"he asked. (The question is, if we lower the income tax rate, revenue would decrease and deficit would increase. If the deficit increases, would this be a negative factor once these credit rating agencies begin to rate us?)
He pointed out that when income taxes are lowered, VAT would increase.
The finance department submitted to Congress in August the government’s tax reform bill, which includes an all-in income tax exemption to all wage earners with an annual income of less than P1 million ($21,387.76).
Along with the proposal is increasing VAT from 12% to 14% and expanding the VAT base by removing all exemptions, except in agriculture, health, banks, education, as well as removing zero-rating, except direct exports.
"Kapag tinaasan natin ‘yung langis, o ‘yung taxes diyan, taasan lahat ng presyo dahil sa transportasyon, tataas ‘yung kuryente. So ang tanong, makabubuti ba ‘yung pagbababa 'nung income tax level sa mga kababayan natin? At ako’y hindi kumbinsido sa ngayon." ("If we increase taxes in oil, prices in transporation, electricity would spike. So the question is, would it be beneficial if we lower the income tax level? I'm not convinced at the moment.")
Aquino said that what he thinks the Constitution asks is progressive taxation, or simply put, those who are richer should pay higher taxes.
"'Yung mga tax tulad sa VAT, damay lahat anuman ang sitwasyon mo sa buhay, kung anuman ang level [mo sa] society. So parang ‘yung VAT at saka ‘yung sa oil, [tatamaan] lahat. Hindi yata ‘yan ang hinahabol ng Saligang Batas na dapat progressive taxation."
([Increasing] taxes like VAT will affect all, regardless of one's status in the society. So VAT or oil tax increases, [I don't] think this is what the Constitution states as progressive taxation.)
Thus he reiterated his earlier promise that his administration will not increase tax, except passing the Sin Tax Law in 2012, which was to implement tax collection in aid of expanding health care coverage in the country.
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