THE Department of Finance (DOF) has submitted to Congress the first package of tax reforms designed to lower personal income tax.
In a statement on Monday, the DOF said that the first package submitted to the Ways and Means Committee of the House of Representatives was just the first of four sets of tax reforms of the government.
Topping these proposals are the restructuring of the personal income tax (PIT) system; expansion of the value-added tax (VAT) base by reducing the coverage of its exemptions; adjustment of excise taxes imposed on petroleum products; and restructuring the excise tax on automobiles except for buses, trucks, cargo vans, jeeps, jeepney substitutes and special purpose vehicles, it said.
The PIT reforms include adjustments in the income tax brackets to correct so-called income creeping; reduce the personal income tax maximum rate over time to 25 percent from 32 percent at present, except for highest income earners; and shift to a simpler, modified gross system.
The DOF said a quarter to a third of the net gain from the proposed tax reforms would be allocated for the conditional cash transfers, lifeline electricity subsidies, direct discounts and higher Philippine Health Insurance Corp. (PhilHealth) coverage, among other targeted subsidies, for the sectors to be affected by the new fuel prices arising from the adjustments in the excise tax on petroleum products.