By Justine Irish D. Tabile, Senior Journalist
TWO STEPS FOR TAX EXEMPTION proposed by President Ferdinand R. Marcos, Jr. will benefit at least 3.13 million workers and 78,000 small businesses but cost the government an estimated R66 billionannual income, Department of Finance (DoF) said.
Finance Secretary Frederick D. Go on Wednesday said that raising the annual tax exemption to P350,000 from P250,000 will reduce revenue by P60 billion annually, while exempting small businesses. minimum corporate income tax (MCIT) will cost another P6 billion.
“This proposal will benefit at least 3.13 million workers, including at least 1.2 million additional workers who will no longer pay personal tax, increasing the number of workers who do not pay tax from at least 5.1 million to 6.3 million,” he said.
Mr. Go noted that those earning between P250,000 and P350,000 a year will enjoy up to P15,000 more take-home pay, while those earning more than P350,000 can get P17,500 more.
“This means that there will be a large portion of hard-earned money that cannot meet daily needs,” he said.
The DoF also said that approximately 78,000 businesses will benefit from the proposal to exempt small and medium enterprises from the minimum corporate income tax. This includes small bakeries, cafes, restaurants, restaurants, sari-sari stores, repair shops, and other family-owned businesses.
Currently, qualified small companies pay MCIT of 2% based on gross income or the standard 20% corporate income tax based on taxable income, whichever is higher, regardless of whether the businesses operate at a loss.
Removing the MCIT will mean that covered businesses that incur losses will no longer have to pay the tax. For-profit companies will remain under it on ordinary business income tax.
“From this measure, if it happens, [foregone revenue will amount to] P6 billion every year,” said Mr. Go.
To make up for the loss of revenue, he said the government could consider charging more excise duty but did not elaborate.
“All you have to do is look at the categories that are taxed, and generally, they will be the same industries.to try what is not covered,” said Mr. Go.
Earlier, House Ways and Means Committee Chairman and Marikina lawmaker Romero “Miro” S. Quimbo said the government plans to completely eliminate the loss of revenue through higher taxes on vape products, hot cigarettes, and sugary drinks.
Deloitte Philippines Corporate Tax Leader Senen Quizon said removing the MCIT will allow small businesses “to be in a better position to maintain cash flow and pursue new opportunities.”
“It may bring short-term revenue to the government, but the long-term benefit lies in reducing pressure on small businesses, improving their capacity to grow and ultimately strengthening the country's financial base through increased economic activity,” he said. BusinessWorld by email.
Asian Consulting Group Founding Chairman and Senior Tax Consultant Raymond A. Abrea said the biggest relief could come from expanding the discretionary approach to taxation as a whole, even if its rate is increased.
Under the Tax Reform for Acceleration and Inclusion law, self-employed professionals and professionals with annual sales or receipts not exceeding P3 million may opt to pay an 8% tax on sales or receipts. income taxes and percentage.
“What we are promoting is to increase the discretionary tax from 8% to 10%, but the limit is from P3 million to P20 million,” said Mr.
The higher limit would encourage more online sellers, freelancers and professionals to register, accurately declare their income and pay taxes, he added.
However, the President of the Foundation for Economic Freedom, Calixto V. Chikiamco, explained the proposals of Mr. Marcos as popular measures that fail to solve the country's political and economic problems.
“Solutions [he] the proposals are all populist – giveaways, tax breaks, and so on. But it does not go to the heart of the problem in our politics and economy,” he said in his interview Money Talks with Cathy Yang on One News on Wednesday.
Mr. Chikiamco warned that giving tax relief without identifying the suffA sharp reduction in revenue could cripple financial risk and have a significant impact on the country's debt ratings.
“This may even affect our estimates if the government cannot identify clear sources of revenue to compensate for all those gifts and tax exemptions,” he said.
The National Government's budget deficit was 2.8% to P786.8 billion in the first quarter from P765.5 billion last year.
The six-month fiscal deficit was equivalent to 47.4% of the government's revised P1.659-trillion deficit ceiling by 2026, which is equivalent to 5.4% of gross domestic product.
FILED DETAILS
Meanwhile, House Speaker Faustino “Bojie” G. Dy III and Ilocos Norte Rep. Ferdinand Alexander “Sandro” A. Marcos filed a bill that would raise this every year. tax-free income limit to P350,000.
House Bill No. 10345 aims to increase the annual income tax exemption limit by P100,000 from the current P250,000 under the Tax Reform for Acceleration and Inclusion law, which allows more Filipino workers to keep most of their income.
The bill seeks to amend Section 24 of the National Internal Revenue Code by restructuring the graduated income tax rates for Filipino citizens and resident aliens.
Under the bill, taxable income exceeding P350,000 but not exceeding P400,000 will be subject to a 15% income tax. Taxable income above P400,000 will remain subject to the existing tax rates of 20%, 25%, 30%, and 35%.
Under the proposal, married taxpayers would continue to file and file their income taxes separately, with any income that can only be allocated to ei.the spouse was divided equally between them.
The measure would also preserve income tax exemptions for low-income earners, including taxable income and vacation pay, overtime pay, night shift differentials, and accident pay.
It would also allow the self-employed and qualified individuals to continue to receive an optional tax of 8% on gross sales, receipts, and passive income exceeding the proposed tax-free threshold of P350,000, instead of the graduated income tax rates and percentage tax.
Meanwhile, Senate President Pro Tempore Vicente C. Sotto III filed Senate Bill No. 2338 also seeks to exempt those earning P350,000 per year from income tax.
However, Senate Finance Committee Chairman Joseph Victor “JV” G. Ejercito filed Senate Bill No.
Under this measure, taxable income of more than P600,000 but less than P2 million will be taxed at 15%. – with Pexcel John Bacon again Kaela Patricia B. Gabriel
