BusinessWorld - Economy Posted on March 04, 2014 10:25:57 PM Auditors back Senate bill to reset income tax brackets, rates REPRESENTATIVES from financial services firms yesterday expressed support for a Senate bill to adjust income tax brackets and reduce the tax rates. During a Ways and Means Committee hearing yesterday on several tax bills, Ma. Lourdes Lim, tax managing partner of Isla Lipana & Co. said: We fully support the adjustment in income tax bracket. Rina Manuel, president of the Tax Management Association of the Philippines said her group shared this sentiment: TMAP fully supports the bills adjusting the income tax brackets and the rates because this will increase the purchasing power of individuals without the need for salary increases, and such an increase in purchasing power can result in a multiplier effect in the economy. Senator Juan Edgardo Sonny M. Angara, chairman of the Ways & Means panel, filed Senate Bill (SB) 2149 on Feb. 14 to adjust income tax brackets at reduce the tax rates in stages, starting Jan. 1, 2015 and ending Jan. 1, 2017. At the hearing yesterday, Mr. Angara said that one suggestion from the House of Representatives is to increase value-added tax (VAT) to compensate for the losses that would result from the adjustments in income tax brackets. The argument is, it [increasing VAT] is more equitable because it is per use, he said. Ms. Manuel also suggested a sensitivity study for the changes in the income tax brackets, especially those earning less than P500,000, to ensure that they are not worse off than before. Some of the income tax brackets will end up paying more than they are paying before with the current income tax schedule, so there is a need for some sensitivity analysis on that., she said. Ms. Manuel also cited a need for the parity between corporate and individual taxpayers. Commenting on a proposed increase in VAT rates, she said that issues in the manner businesses turn in the said tax should be smoothed out. Punongbayan and Araullo President Lina P. Figueroa, meanwhile, said that adjustments in taxation will prepare the country to compete with neighboring countries come 2015, when regional economic integration is expected. Ms. Figueroa pointed out that tax rates are among the factors considered by investors. I know [for] businessmen, the tax rate on the employees puts a lot of pressure in the wages and the cost of doing business, she said. If we decrease the income tax rates, and we increase the VAT rates, the increase in VAT will depend on how businesses remit their liabilities, she said. For its part, the Department of Finance (DoF) said that adjusting income tax brackets could result in significant losses. DoF Undersecretary Jeremias N. Paul said: Initial estimates show revenue losses can go up to a total of P43 billion. Mr. Paul said that such a loss would negate expected gains from taxes. I would also like revenue neutrality; for every proposal to reduce the tax rate, there should be a compensating measure that would alleviate income tax laws, Mr. Paul said. -- Maria Laura V. Angeles
Posted on: Wed, 05 Mar 2014 07:32:29 +0000