The “Tax Reform Act for the Masses and the Middle Class,” seeks to exempt those making P33,333 ($590) monthly or less from paying income tax. It is also looking into providing tax breaks for families of persons with disabilities, those caring for elderly parents or relatives, and those with children.
By RAYMOND CASTRO
MANILA – A progressive lawmaker is pushing for more tax breaks for ordinary folk, saying this can help struggling families to cope with the rising prices of food, basic services, and other staples.
“Rising prices and untamed inflation rates in the past few years all the more justify the need for a tax reform package that would reduce the income tax rates of the overburdened Filipino working-class families. Reducing income tax rates for working families will not only improve their way of life, but also strengthen their purchasing power which will boost overall domestic demand for consumer goods,” ACT Teachers Party-list Representative France Castro said.
The bill, titled “Tax Reform Act for the Masses and the Middle Class” (TRAMM), seeks to exempt those making P33,333 ($590) monthly or less from paying income tax. It is also looking into providing tax breaks for families of persons with disabilities (PWDs), those caring for elderly parents or relatives, and those with children.
This despite Finance Secretary Benjamin Diokno’s latest pronouncement that the country should give the new tax system a chance to operate, adding that it is “too early to tinker with it.”
As it stands, only minimum wage earners are exempted from income tax. Meanwhile, the country’s rich have received tax breaks under former President Duterte’s tax reforms.
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“If he (Diokno) was able to support income tax reduction for big corporations who are reaping record-profits, he must all the more support TRAMM which will reduce income tax rates for the poor and the middle class. It’s about time that he descends from his ivory tower of privilege and comfort,” said Castro.
What’s in the bill?
Castro listed the bill’s features:
- A 20-percent personal income tax rate cap applicable to all citizens.
- The initial ?400,000 ($7,100) of their income is tax-free.
- Reintroducing more dependant exemptions for senior citizens and those with disabilities who became dependents.
- Increasing the ?150,000 cutoff point for tax-free bonuses.
- Require the Bureau of Internal Revenue (BIR) to adopt a progressive personal income tax schedule with 10 (at the very least) brackets.
This plan, according to Castro, raises the cap on tax-free incentives to P150,000 and instructs the Bureau of Internal Revenue to create a progressive, 10-bracket (at the very least) personal income tax schedule. Further, it creates a maximum personal income tax rate of 20-percent for individual residents, who are exempt from paying taxes on the first P400,000 of their income, and pays for additional dependent exemptions for senior citizens and those with disabilities.
Based on the proposed bill explanatory note, by redistributing the tax burden away from individual incomes or compensation and the poor and middle class, the construction of a progressive tax system can aid in the achievement of the goals of wealth redistribution to a wider segment of the population affluent people’s consumption, business profits, and spending.
The bill specifies that the necessity for a tax reform package will lower the income tax rates for Filipino employees from overburdened middle-class households is further supported by rising costs and unspeakably high inflation rates over the past few years. Working families’ quality of life will be improved by lowering income tax rates, which will also increase their spending power, which will increase domestic demand for goods overall. Furthermore, it will also benefit the economy as a whole.
Gov’t has been giving more tax breaks for the rich
Government officials are reportedly eyeing more taxes in the coming years as the country is buried in debt amounting to P12.7 trillion ($230.8 billion), a record-high for the Philippines.
This, critics said, will fall on the shoulders of ordinary Filipinos who are still recovering from the government’s poor pandemic response – the excessive lockdowns and subsidies that were both too little and too late.
Read via our mirror site: Higher taxes await Filipinos as debt amounts to trillions
In a 2021 report, independent think tank Ibon Foundation urged the Philippine government to tax the super-rich as “an effective way to raise much-needed funds for expanding social and economic services while reducing inequality,” adding that the country’s one-percent population holds nearly half or 40-percent of the country’s wealth.
“A wealth tax also improves democracy in the country. If we want to change our politics, we also have to change the maldistribution of wealth that gives a handful too much power,” said Ibon.
Castro said that Diokno, who sat as governor of the Bangko Sentral ng Pilipinas before being appointed as finance secretary, was paid “way above the average salaries of poor and middle-class Filipinos.”
She added, “hence, the least that the public expects from him is a little bit of empathy, of concern, of compassion for our suffering citizens who are overburdened by high income tax rates.” (JJE, RVO)