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DOH: Income tax cuts, a possibility
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Finance Secretary Cesar V. Purisima. Photo courtesy of Purisima on Facebook.MANILA — In a bid to align with regional norms, finance department executives said they are open to amending the current income tax situation in the country but would need support in looking for other means of generating revenues.
Finance Secretary Cesar Purisima said that they plan to revisit the income tax situation provided that the government’s budget for infrastructure and social services would not be affected.
“Once we pass the other measures, we’d be open to review this,” Purisima said. “We can’t tweak just one part. We should run models to see the effects,” he added during his speech before the Senate last Tuesday.
Recently, there have been proactive calls for the government to look into the current income tax regime.
According to the Tax Management Association of the Philippines (TMAP), the Philippines has the highest income tax deduction in the region.
Likewise, the World Bank also mentioned that the government should take into account the possibility of bringing down the taxes to make Filipino workers at par with their Southeast Asian neighbors.
Based from TMAP’s recommendation, ordinary employees should be taxed at 30 percent at most. TMAP added that for the Philippines, the tax rate should be somewhere between 20 and 30.
Employees are normally taxed based on the salaries they receive. Those who earn at least P500,000 annually are taxed at 32 percent.
Compared with the other countries, Filipinos are charged more given in Malaysia, Thailand, Vietnam and Singapore workers are charged at 11, 10, 20, and 2 percent, respectively.
Purisima, who also heads the Cabinet’s economic cluster, also mentioned that there are other factors that need to be taken in and one of which is the passage of the rationalization of fiscal incentives for corporations and the fiscal responsibility bill.
Meanwhile, Senate President Franklin Drilon assured Purisima that a thorough evaluation will be done before amendments to income taxes will be made.
