MANILA, Philippines – The Department of Finance (DOF) said Wednesday, August 20, that it is open to revisiting and studying the entire tax structure to see if it is possible to reduce income tax rates.
"We're all for it. But rather than a 'piece meal 'approach that can be disruptive, we prefer to revisit the whole thing," DOF Secretary Cesar Purisima said.
The finance chief said the agency would not only look at tax rates, but also exemptions to see how to make the fiscal system “more friendly” to both investors and individuals.
“… but at the same time, address our needs as a government," he added.
Hopefully, he said the entire tax structure will be more equitable, progressive and competitive, and able to generate more revenues.
"It is like a building. You cannot just tweak one part or else the whole thing will collapse. It's the same with taxation," Purisima illustrated.
Previously, the World Bank called for the Philippine government to raise tax revenues by broadening the base, and making the tax system simpler and more efficient, while lowering certain tax rates. (READ: World Bank: Broaden base, simplify taxes to boost revenues)
Also, the Tax Management Association of the Philippines (TMAP) is pushing for the adjustment of income tax brackets and the reduction of income tax rates in the country.
The association of tax consultants and corporate tax practitioners filed with the Ways and Means Committees of both houses of Congress its position on the various proposed income tax bills.
TMAP recommends that the income tax brackets should provide for a 0% tax rate at the level of those defined as “marginal income earners,” which may also be aligned with the level of minimum wage earners.
Currently, even a P10,000 ($227.69) annual taxable income is taxed at 5%.
TMAP said that it supports the adjustment of income tax brackets to consider the current Consumer Price Index.
The organization also supports the periodic automatic indexation of the income brackets by the DOF based on the criteria set by Congress. – Rappler.com
*($1 = P43.92)