As the Philippines pushes for inclusive growth, it is imperative that Government create the necessary mechanisms to enable the vast majority of Filipinos to feel the fruits of this growth. At present, efforts are underway to promote ease of business; generate jobs; support the growth of micro, small, and medium enterprises (MSMEs); and address rising unemployment and underemployment.
In spite of all these, however, ordinary Filipinos are still feeling the pinch of high taxes and rising prices. The Consumer Price Index shows that a basket of goods worth Php100 in 1998 is already worth Php196 in 2013, almost doubling in a space of 15 years. While the private sector has a role in responding to the needs of its employees, many enterprises also struggle with ensuring fair and equal pay for their workers while keeping their own businesses afloat.
Thus, the government has to play the delicate balancing act between the growing demands of its labor force and the limitations of the private sector. One solution is to review and reform the current tax system in a way that reflects current prices, and enables a more equitable distribution of wealth for its citizens.
The Tax Reform Act, therefore, seeks to amend Section 24 of the National Internal Revenue Code of 1997, as amended, by adjusting the levels of net taxable income and simplifying the nominal tax rates for the purposes of .computing the individual income tax, based on current 2013 prices. The Tax Reform Act effectively lowers the taxes on the Filipino working class-which comprises around 22 million of the Philippine population-allowing them to enjoy a higher net income and increasing their purchasing power, without necessarily imposing a burden on the micro, small, and medium enterprises (MSMEs) that comprise a majority of employers in the Philippines. The collections from The Tax Reform Act also adjust the tax level of the upper one percent. (1%) of taxpayers, making sure that the government is able to collect a larger share of income from those who can afford to pay more. A more just tax system will also serve to encourage citizens to declare their true income and pay their taxes.
In effect, the Tax Reform Act serves as one of the important reforms to create a more equitable, just, and effective tax regime for Filipino taxpayers. It supports the government’s push for inclusive growth while ensuring that government is still able to raise funds for social programs that directly benefit the poor. It is a systemic, win-win solution that offers the greatest benefit to the greatest number of Filipinos.
In view of the foregoing, the approval of this bill is earnestly sought.