Additional 3M low income Filipinos to be exempted from taxes in Duterte’s tax reform plan

Additional 3M low income Filipinos to be exempted from taxes in Duterte’s tax reform plan

- in Economy
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@MindaNation
Finance news

An additional 3 million taxpayers with taxable incomes of P250,000 and below would be included in the batch that would pay zero taxes. This one of the main features of the first reform package submitted by the DOF to the Congress last September is that personal income tax (PIT) rates would be cut from 32 percent to 25 percent that will in effect exempt 4.7-M taxpayers, which already include the current 1.7 million minimum wage earners, from paying income taxes.

Earlier, President Duterte’s economic managers formally guaranteed various social protection initiatives to shield the poor and low-income households from the impact of the proposed adjustments in excise fuel taxes under the initial comprehensive tax reform program that the government submitted last September to the Congress for its approval.

In a joint statement, Secretaries Carlos Dominguez III of the Department of Finance (DOF), Benjamin Diokno of the Department of Budget and Management (DBM), and Ernesto Pernia, the director general of the National Economic and Development Authority (NEDA), said these “highly targeted transfer programs” would help cushion the impact of the proposed indexing to inflation of the excise taxes on oil products on “the poorest 50 percent of the population.”

Another 450,000 taxpayers as gathered from the 2013 database of the Bureau of Internal Revenue (BIR) would pay only 20 percent of the excess of P250,000 of their net taxable income.

For those with a net taxable income of P400,000 but not over P800,000, the highest tax that they would pay under the new DOF tax reform plan  is P130,000, compared to the current system where they are now shelling out a maximum of P221,000 for PIT.

Based on the 2013 BIR database, this bracket consists of 357,875 taxpayers representing 4 percent of the total tax base for individuals, includes government workers under Salary Grades 18 to 25.

For individuals with net taxable income  of P800,000 but not exceeding P2 million, which covers 114,856 individuals or 3 percent of the tax base, the maximum PIT paid under this bracket would only be paying P490,000 in the first year of implementation, compared to P605,000 under the current system.

Some 28,000 individuals earning P2 million to P5 million, representing 1 percent of the tax base would be taxed P490,000 plus 32 percent of their annual gross income in excess of P2 million.

The maximum PIT under this bracket is P1,450,000 compared to the current system where one has to cough up P1,565,000 for earning P5 million a year.

The last bracket of ultra-rich taxpayers comprising less than 6,000 individuals earning over P5 million would have to pay a tax of P1.45 million plus 35 percent of the amount in excess of P5 million.




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Tugade and Duterte, they don’t make em like these anymore

At 72 years old, no one would blame