TARLAC CITY: The Department of Finance (DOF) is optimistic that the tax reform bill could help reduce the country’s poverty rate, currently pegged at 21.6 percent, to 14 percent by 2022 with 99 percent of Filipino taxpayers to benefit from it.
In a discussion for the 2nd Association of Southeast Asian Nations (Asean) Multi-Sectoral Forum recently, Finance Assistant Secretary Teresa Habitan said the Tax Reform for Acceleration and Inclusion (TRAIN) seeks to simplify the current tax system and make it fairer and more efficient for Filipino taxpayers.
“We have some of the highest tax rates in Asia and in Southeast Asia, which means we are not competitive enough,” she said.
But with the proposed tax reform, Habitan assured it will boost investments and employment in the country’s labor sector, especially for blue-collar workers.
Among the proposed new taxes in the TRAIN bill are reforms on lowering the personal income tax, expanded value-added tax (VAT) coverage, excise tax on fuel products, and excise tax on particular automobiles.
The tax reform intends to raise the per capita gross national income from US$3,500 to US$12,000.
Under the measure, the maximum rate of personal income tax will be reduced over time from the current 32 percent to 25 percent, except for high-income earners.
Those earning P250,000 or below annually will be exempted from paying income taxes. The mandated 13th month pay up to P82,000 as well as other bonuses remain tax-free.
Among Asean countries, the Philippines has the highest VAT rate at 12 percent while Cambodia, Indonesia, Laos, Thailand, and Vietnam have only 10 percent; Singapore, 7 percent; Malaysia, 6 percent; Myanmar, 5 percent; and Brunei, zero VAT.
Currently, the country has 59 lines of VAT exemptions compared to 37 for Indonesia, 35 for Thailand, and 14 for Malaysia.
The Philippines also has one of the lowest taxes on fuel with zero tax on diesel, and fuel taxes have not increased since 1997 but the proposed bill also increases the tax rates of some luxury automobiles.
“The tax reform is our investment for our future. We have to be reminded that no investment is ever easy,” Habitan stressed.
The forum, organized by the Philippine Information Agency’s regional office in Central Luzon, also featured an Information and Service Caravan where citizens got immediate support, advice, and free items from participating government agencies.
“We are doing this campaign not only because we chair this year’s ASEAN summit, but also because we want to raise public awareness about the association,” PIA Regional Director William Beltran said.