Foreign and local business groups are supporting the proposed bill that will adjust the income-tax brackets and lower individual and corporate income taxes to arrive at a progressive income-tax system.
The Tax Management Association of the Philippines (TMAP) said that a total of 18 business groups, including the Amercian Chamber of Commerce, the Philippine Chamber of Commerce and Industry, and the Federation of Filipino-Chinese Chambers of Commerce and Industry are supporting the “unity statement” in support of long-delayed tax reforms.
The statement pointed out that there is an inherent inequity in the tax system because it imposes the highest rate of tax of 32 percent on individuals who are not considered part of the richest sector in society, and are, in fact, part of the working class.
“The inherent inequity in the tax system is brought about by the fact that the top bracket of P500,000 has remained unchanged since 1986. Meanwhile, inflation has pushed up consumer prices by more than 300 percent, resulting to the so-called bracket creep,” the statement said.
“Inflation has pushed up nominal wages and salaries into higher tax brackets causing increases in income taxes but no increase in purchasing power,” it added.
The other groups that support the unity statement are the Pilipino Banana Growers and Exporters Association; Japanese Chamber of Commerce and Industry of the Philippines; European Chamber of Commerce of the Philippines; Alliance of Workers in the Informal Economy/Sector; Foundation for Economic Freedom; Canadian Chamber of Commerce of the Philippines; Korean Chamber of Commerce of the Philippines;
Philippine Association of Multinational Companies Regional Headquarters; Management Association of the Philippines, Confederation for Unity, Recognition and Advancement of Government Employees; Australia-New Zealand Chamber of Commerce; Finex; Center for Strategic Reform; and Makati Business Club.
The tax rate in the Philippines is such that individuals earning more than P500,000 in taxable income each year are paying the same highest tax rate of 32 percent as those who are earning hundreds of thousands of pesos in annual taxable income.
This tax rate on an equivalent of P500,000 in taxable income is the highest in the Association of Southeast Asian Nations.