Angara Asks to Update “Outdated” Tax System
Senator Edgardo “Sonny” Angara on Thursday asked the Department of Finance (DoF) to amend the “outdated” tax system in the country.
Noting that the “command of the Constitution that we should have a progressive system,” Angara said that the current top tax bracket should be higher and the tax rate should be lowered.
The current top bracket – as set by Ferdinand Marcos – was over P500,000 a year. People who earn this should be taxed 32%, which was aimed to be amended by the Senate Bill No. 2149 that is authored by Angara. In case this was turned into law the top tax bracket will become a million and the tax rate will be down to 25%.
“Can you imagine? With 500,000, my parents told me you can already buy a house and lot in the 70’s and early 80’s. Ngayon, kotse na lang mabibili mo doon,” Angara said. “Tax bracket should be adjusted to make it more sensitive to current salaries of Filipinos.”
He also pointed out that tax bracket in rich countries are quite lower than the Philippines.
In the Philippines if one is earning P500,000 (US$11,000) a year, he must pay 32% tax, as compared to Singapore’s top tax bracket US$250,000 with a tax rate of 20 percent. In Indonesia, the top tax bracket of $43,000 is taxed 30% while in Malaysia the top tax bracket of $30,000 is taxed 26%.
Some tax analysts supported this bill as higher income will result in higher capital inflow and higher purchasing power. Some noted that the tax system should also be simplified to make the compliance easier resulting in more tax collection.
The Malacanang was reportedly open with the suggestions as long as it will not drastically affect the nation’s finances.