Back in 2008 (7 years ago!), I called for a major revamp of the ‘then’ decade old and obsolete tax law, specifically for the part pertaining to individual income taxes. Since then, minor revisions were made, like the exemption of minimum wage earners and adjusting the 13th month pay and other benefits ceiling excluded from the computation of gross income.
[Read: Rappler—Aquino signs law raising tax exemption cap for bonuses.]
Yet, the gist of individual income taxation remains, that is — the (almost) two decades old graduated tax table that defies inflation. The economy has gone through at least two financial crises, but the tax brackets are unable to keep up with rising consumer goods (and services) prices since 18 years ago. The Philippines’ Consumer Price Index (CPI) has increased by 119% from 1997 to 2014—for crying out loud!
But unlike 7 years ago, there are now bills lodged before the Congress that purport to lower income taxes for individuals, which Pres. Benigno Aquino III deemed a bad idea. Luckily, Sen. Sonny Angara carries on and is pushing for government to prioritize public needs over credit ratings.
Apparently, we have a president who’s an economics graduate, who fails to recognize that increased government spending and lower tax collection can bolster economic growth by putting more money into people’s hands, which eventually will stimulate more economic activity in order to collect more taxes in the future.
Above all, we have a president who doesn’t believe that income taxes should be commensurate to the level of earnings vis-a-vis the standard of living of individuals. (Let alone the comparative effective individual income tax rates in our neighboring countries.)