These past few days have been nerve-wracking because so much had happened, both locally and in the international scene. I am quite certain that majority of us took to our social media to air out our opinions on the various current events and the hashtag #mytwocents was often used for these. More of that, one of the current developments that I am most concerned about is the tax reform agenda primarily because I am one of the many taxpayers who will be affected by it. Every pay slip, taxes seem to extract a huge cut from our earnings and they take quite a burden especially for those who do not see their taxes working for them.
During the recent campaign period, one of the platforms of our now President Rody Duterte is on tax reform. True enough, a few months into his presidency, the Duterte administration submitted to the Congress its proposed Tax Reform for Acceleration and Inclusion Act. The first of five packages of the proposed tax reform program focused on “putting more money in people’s pockets” and “funding investments for the Filipinos for a more inclusive growth.” The former pertains to reforms personal income tax (PIT) system while the latter on certain reforms for VAT and excise taxes. My discussion will be centering on the former.
Based on the proposed PIT system, at the drop of a hat, I agree to the proposed changes. The principal reason is that I believe the reform in the PIT system is the truest sense of “putting more money in people’s pockets.” The package proposes to reduce the individual income tax rates for all individual taxpayers (except for those that are, should I say, “ultra” rich) and exempting those whose annual income is P250, 000 and below. Such would increase the take-home pay and result in a lot of savings – a longed-for desire for every taxpayer, including me. Higher disposable income would somehow increase the purchasing power of the taxpayer, which is I think is good for our economy. Based on the infographics released by the Department of Finance (which was also based on the Bureau of Internal Revenue sample data), about 83% of the total individual taxpayers would be exempt from income tax with the proposed reform, while under the current tax schedule, those earning over P10,000 still has a tax due.
The proposed amendment also addresses the fact that we need to update our tax system. Just pondering on which among our taxes have not been adjusted for nearly 20 years, I think the PIT system is one of them. The amendment also addresses the issue on inflation. Prices of the commodities have increased over the years and yet the value of our income is not at par to that change and what is worse, we get to be taxed higher.
I believe we are due for this change. I know there will be some who would opposed the proposed tax reform but I hope the tax reform agenda will be given a chance to be carefully reviewed and thereafter approved. Cutting out all the expletives, one of the things the President would want to achieve in his administration is to alleviate the plight of the Filipino people and I think this tax reform is one of the real positive changes we would want to happen. #taxreformnow.
Ms. Punay is the senior Manager of the Audit & Assurance Division, P&A Grant Thornton Davao Branch. Her company is one of the leading audit, tax, advisory and outsourcing companies in the Philippines with 21 partners and over 800 staff members.
As published in Mindano Times, dated 14 November 2016