income tax

Senate Bill No. 697: Adjusting the Level of Net Taxable Income and Nominal Tax Rates

As the Philippines pushes for inclusive growth, it is imperative that the government create the necessary mechanisms to enable the vast majority of Filipinos to feel the fruits of this growth. At present, efforts are underway to promote ease of business, generate jobs, support the growth of micro, small, and medium enterprises (MSMEs); and address rising unemployment and underemployment.

In spite of all these, Filipinos are still feeling the pinch of high taxes and rising prices. The Consumer Price Index shows that a basket of goods worth PhplOO in 1997 is already worth Php228 in 2015, doubling in a space of 18 years since the tax brackets were last adjusted. While the private sector has a role in responding to the needs of its employees, many enterprises also struggle with ensuring fair and equal pay for their workers while keeping their own businesses afloat.

Thus, the government has to play the delicate balancing act between the growing demands of its labor force and the limitations of the private sector. One solution is to review and reform the current tax system in a way that reflects current prices, and enables a more equitable distribution of wealth for its citizens.

The measure, therefore, seeks to amend Section 24 of the National Internal Revenue Code of 1997, as amended, by adjusting the levels of net taxable income and simplifying the nominal tax rates for the purposes of computing the individual income tax. This Act effectively lowers the taxes on the Filipino working class — which comprises around 22 million of the Philippine population — allowing them to enjoy a higher net income and increasing their purchasing power, without necessarily imposing a burden on the micro, small, and medium enterprises (MSMEs). The collections from this Act also adjusts the tax level of the upper one percent (1%) of taxpayers, making sure that the government is able to collect a larger share of income from those who can afford to pay more. A more just tax system will also serve to encourage citizens to declare their true income and pay their taxes.

In effect, this measure serves as one of the important reforms to create a more equitable, just, and effective tax regime for Filipino taxpayers. It supports the government’s push for inclusive growth while ensuring that government is still able to raise funds for social programs that directly benefit the poor. It is a systemic, win-win solution that offers the greatest benefit to the greatest number of Filipinos. 

In view of this foregoing, immediate approval of this bill is earnestly sought. 

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Bam Files “People’s Fund Bill”

In light of his earlier pronouncements regarding the Priority Development Assistance Fund (PDAF) and the need to give taxpayers greater control over public funds, Senator Bam Aquino has filed the People’s Fund Bill.

The People’s Fund Bill creates mechanisms for an individual taxpayer to allocate five percent (5%) of his or her income tax for any of the following: (1) an accredited charity or civil society organization; (2) a priority national or local government project; or (3) a legitimate political party.

Under this bill, the Bureau of Internal Revenue (BIR) shall establish the mechanism that would enable individual taxpayers to select beneficiaries upon filing of their annual income tax returns.

Meanwhile, an inter-agency committee led by the Department of Budget and Management (DBM) shall determine the eligibility of respective organizations, and shall likewise set the conditions, guidelines, and reporting requirements for the receipt and use of the funds by the benefitting organizations.

“The people’s clamor for transparency, accountability, and good governance is growing louder and stronger. Government must heed the call of the people and institutionalize mechanisms that will ensure greater citizen involvement on how public funds are being spent,” Aquino stresses.

“To be clear, hindi ito bagong buwis na ipapataw sa mga tao.  Ang People’s Fund ay manggagaling sa binabayad na ng mamamayan na tax kada taon.  Ang pinag-iba lang ay merong kapangyarihan ang mga taxpayer na piliin kung saan pupunta ang porsyento ng perang ito.  Ginagawa na ito sa ibang mga bansa; panahon na, na gawin ito sa Pilipinas.”

“After all,” Aquino continues, “our estimate of the People’s Fund is around ten billion pesos.  Mas maliit pa rin sa papalitan niyang PDAF natwenty-five billion pesos.  Sa kadulu-dulahan, nakatipid pa rin ang gobyerno ng malaking halaga na ngayo’y napupunta sa pork barrel.”

Photo source: Christina Mendez

“People’s Impatience a Good Sign” — Bam

Senator Bam Aquino says that “the people’s impatience” toward corruption and impunity is “a good sign,” citing the “Million People March” that mobilized thousands of Filipino citizens in different parts of the country on Monday.

The “Million People March” was born out of highly publicized “pork barrel scam” that amounted to at least P10 billon and allegedly involved dozens of lawmakers.

“The people’s impatience on this issue is a positive development for reform-minded public servants,” Sen. Aquino points out.

“Ang taumbayan ang nag-uudyok sa mga opisyales na ipagpatuloy at isatupad ang mga repormang kinakailangan natin. Sila ang lakas namin upang gawin ang mga bagay na magdadala ng pagbabago sa mga baluktot na sistema, at magsusupil sa mga tiwali na nagnakaw sa bayan,” he adds.

The young Aquino, a reform advocate with a long history of youth and civic leadership, likewise calls on fellow lawmakers and colleagues in government to “heed the people’s call” and use public funds “to truly empower the people instead of enriching a select few.”

“People’s Fund” instead of PDAF

Toward this end, Sen. Aquino is filing “The People’s Fund,” a bill that aims to give taxpayers more direct control over public funds.

The People’s Fund “seeks to revolutionize public budgeting and funding by giving the taxpayers of the Philippines clear and concrete choices on where their money should go.”

It provides a mechanism for five percent (5%) of an individual’s income tax to be allocated to either of the following: (a) an accredited charity or civil society organization; (b) a national or local priority government project; or (c) a legitimate political party.

Sen. Aquino had said regarding the bill, “People are sick and tired of seeing their taxes go to waste when precious money could instead be channeled toward initiatives that truly benefit millions of Filipinos. It’s time for the PDAF to go and bring the power back to the people through the People’s Fund.”

Photo source: Yahoo Philippines
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