SENATORS want to pass a tax reform package that will favor the poor, particularly micro-businesses and marginal income earners.
Senator Juan Edgardo Angara, Senate ways and means committee chair, said it is high time to revise the country's taxation system.
He welcomed the part of the proposed comprehensive tax reform package that seeks to exempt micro-businesses and marginal income earners from income tax.
"Malaking ginhawa po para sa ating ordinaryong mamamayan na hindi na bubuwisan ang mga maliliit na negosyo. Sa pamamagitan nito, mas mabibigyan natin sila ng tyansa na lumago ang kanilang negosyo na magreresulta naman sa paglikha ng mga trabaho," said Angara.
Under the present tax regulations, marginal income earners are self-employed individuals deriving gross sales or receipts not exceeding P100,000.
Among them are farmers and fisherfolk selling directly to consumers, small sari-sari stores, small carinderias or turo-turos, and drivers or operators of a single unit tricycle.
Currently, marginal income earners are exempted from paying business taxes such as VAT and percentage tax but are still subject to income tax.
Micro businesses with assets below P3 million may be exempt from income tax, pursuant to the existing Barangay Micro Business Enterprise law, but they need to register first at the City Office of the Treasurer in their area.
Angara explained that the automatic exemption, in effect, would finally afford equal protection and benefits to marginal income earners and micro businesses from income tax.
Under the bill approved by the House of Representatives, a distinction has been made between compensation income earners and the self-employed or professionals in the proposed new income tax regime.
According to the Department of Finance, it seeks to impose a one-time flat tax to self-employed and professionals so as to encourage these "hard-to-tax individuals" to voluntarily and timely comply with their tax obligations.
“Ang importante dito ay gawing simple at mas madali ang sistema ng pagbubuwis upang matulungan ang ating mamamayan na magbayad ng tamang buwis. Dahil talagang nahihirapan ang karamihan lalo ng ang ating mga maliliit na negosyante sa kumplikadong sistema sa kasalukuyan,” the senator said.
Angara said he will study carefully the various proposals on how to reform the tax regime for self-employed and professionals so it would ultimately benefit the small businesses.
"That I think is long overdue. We have a 20-year-old income tax system and people – maybe the cameramen, the BPOs, the teachers, the soldiers, they’re earning not very much, but they’re taxed 20-25 percent. Kailangan, mabago na ‘yun," he said.
Angara said most of our Filipino workers are suffering because of too much taxes being imposed by the government.
“Kakainin na lang ng marami ay ibabayad pa sa tax. I think it is time that we balance everything. In that way, those whose earnings are limited will have a chance to improve their buying capacity," Angara said.
Senator Sherwin Win Gatchalian said that the goal of "simplification and equity" of the tax reform package would mean a reduction in tax leakages.
The tax reform proposal follows a progressive system, which means the rich will have to pay higher taxes. This feature, said Gatchalian, is the equity part of the package.
The latest proposal will reduce the number of tier levels from six tiers of taxation to maybe four tiers.
"Again, ang gusto natin ma-simplify to para sa mga tax payers, para 'pag nag-file di sila mahihirapan sa declaration,” he said.
Gatchalian said the tax reform proposes that earnings of up to P3 million will be taxed at 8 percent or graduated. Gross sales of P250,000 and below will be tax exempt.
“We will protect our small entrepreneur businessmen,” Gatchalian said.
Senate Minority Franklin Drilon, for his part, said the tax reform proposal will make for easier tax administration.
It will create a system where there is a graduated rate depending on the income of the professional usually results in a very tedious examination of whether or not a deduction is allowed.
"Because you try to reduce your taxable income. Wherein if it is just a flat rate, then your deduction is immaterial because your basis is your gross income. It is easier for purposes of tax administration. That would make for easier tax administration and better collection," he said.
Finance Secretary Carlos Dominguez III earlier said that the Duterte administration’s first tax reform package will shift the burden of taxation to the ultra-rich while easing it for the majority of the population, shifting the tax burden from the lower 99 percent of the community to the wealthiest 1 percent, ending decades of unjust taxation that polarized wealth rather than distributed it.
Dominguez added that the package will build a robust middle class to ensure stability and sustainability in our nation’s progress. (VoxPop Philippines)