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The draft law prepared by Mr. Quimbo’s committee seeks to trim personal and corporate income taxes in two steps.
It will first adjust the income tax rates to inflation upon signing into law.
A second adjustment will follow after about three years, Mr. Quimbo earlier said, collapsing the current seven-tier bracket into four:
• tax exemption for workers earning less than P180,000 yearly;
• 9% for those earning P180,000 to P500,000;
• 17% for those earning between P500,001 and P10 million;
• and 30% for those earning above P10 million.
This is a leap from Republic Act No. 8424, or the Tax Reform Act of 1997 that slaps a 5% tax on workers earning below P10,000 annually.
Corporate income tax rate, meanwhile, is proposed to be cut to 25% from the current 30%, which is deemed the highest in Southeast Asia.
As a rule, tax measures should come from the House, but counterpart measures are also being tackled by the Senate committee.
Mr. Angara said that he and Mr. Quimbo presented to the President arguments in favor of income tax reform, citing benefits to individual households and to the national economy.
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