Recto sees hope for tax reform measure


Congress can still pass the income tax reform bill despite the opposition of President Benigno Aquino 3rd, Senate President pro-tempore Ralph Recto said on Sunday.

Malacanang has rejected proposals to lower income tax, saying it would lower government revenues and may even affect the country’s credit ratings.

But Recto disputed such claims, noting that the estimated P30 billion projected revenue loss from lowering personal income tax is only one percent of the P3 trillion proposed 2016 budget and one-third of one percent of the country’s gross domestic product (GDP).

“It will not affect our credit rating. In fact, lowering income tax will increase the purchasing power of workers because they will have a bigger take home pay and it will have a multiplier effect since our economy is domestic driven,” Recto said in a radio interview aired over DZBB.

The senator added that at least five million wage earners are paying income tax equivalent to four months of their yearly salary because of the old tax brackets that have remained unchanged since 1997.

There are seven brackets under that National Internal Revenue Code of 1997 and the highest — 32 percent — is for workers with an annual income of P500,000 and above.

“32 percent is 1/3 of a worker’s annual salary, so that’s four months’ worth of salary in a year and it still don’t include other deductions like the Social Security System (SSS) or the Government Service Insurance System (GSIS) and Philhealth,” Recto noted.

He said this is not fair to workers, thus the need to pass the income tax reform act in order to make the tax law timely.

Recto is proposing that the first P150,000 income of workers be exempted from tax.

“So regardless if you are single or married, as long as your annual income will not exceed P150,000, you will be exempted. If you are married and your partner is also earning P150,000 or less both of you are also exempted,” he explained.

The senator added that the president may change his position on the issue if he is provided with the right information on the measure.

Recto is the author of one of several income tax reform measures pending in the Senate but the chamber won’t be able to act on them until the House of Representatives passed its own version.

Meanwhile, Senator Sonny Angara called on the Aquino administration to focus on how to generate more revenues.

Angara noted that the Finance department and the Bureau of Internal Revenue (BIR) are asking a 224 percent increase in their budgets for 2016.

“If the DOF and BIR believes that the government is capable of providing such increase, why can’t they let go of the P30 billion projected revenue loss with the passage of the measure that seeks to lower income tax?” he pointed out.

Congress, he added, even expressed its openness to a compromise by simply adjusting for inflation the present tax brackets, which were left unchanged since 1997, instead of reducing the prevailing tax rates.


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  1. This Recto was the promoter of 12% VAT! Dahil tinga sa kanila kaya ok lang. Pero kaming mahihirap ang tinamaan! Hindi dapat maging bahagi ng pamahalaan yang taong yan!