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Philippines Government Urged to Cut Tax

by Mary Swire, Tax-News.com, Hong Kong

27 August 2015


Pressure is increasing on the President of the Philippines, Benigno Aquino, to reduce the country's personal income tax (PIT), which is one of the highest in the region.

According to Senator Francis Escudero, the need for a PIT cut is now "urgent" and he called on the President to support one of the bills pending in Congress to reduce the PIT burden. "President Aquino should not let the opportunity pass to bring down one of region's highest individual income tax rates," Escudero told local media.

Escudero is not the only member of Congress urging the President to endorse a tax cut. Last month, Sonny Angara, Chairman of the Philippines' Senate Ways and Means Committee, suggested that Aquino's "best goodbye gift to the people" would be to lower personal income tax rates.

The Philippines has the third-highest PIT top rate among Association of Southeast Asian Nations member countries at 32 percent, after Thailand and Vietnam at 35 percent. In addition, the top rate starts to be levied on taxpayers earning more than just PHP500,000 (USD11,000) each year. What's more, the country's current PIT tax brackets have remained unchanged since 1997, even though the consumer price index has almost doubled during the period.

The Government's Communications Secretary Herminio Coloma Jr told a recent press briefing that the President is "open" to proposals that would reduce the personal income tax burden, but any such measures would have to be offset with revenue increases elsewhere in the tax system. However, Coloma also said that the Department of Finance would prefer to see a more comprehensive review of taxation rather than piecemeal measures "so as not to put our fiscal gains and fiscal health at risk."

Finance Secretary Cesar Purisma told the House of Representatives appropriations committee earlier this month that changes to income tax rates are not currently on the Government's agenda, and that President Aquino was keen to maintain tax stability in the final year of his term.

TAGS: Finance | tax | Philippines | Thailand | tax rates | individual income tax | Vietnam | Communications

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