THE Marcos Jr. administration is crafting a new tax reform package that seeks to recalibrate personal income taxes and provide relief measures to micro enterprises, targeted for passage before President Ferdinand R. Marcos Jr. leaves office in 2028.
Finance Secretary Frederick D. Go confirmed to the BusinessMirror on Sunday that the tax package, dubbed the ‘Progress Bill,’ will include adjustments to personal income tax and provide tax breaks for micro, small and medium enterprises (MSMEs).
The Finance chief withheld further details of the package, saying these would be disclosed after the annual State of the Nation Address on Monday, July 27, where Marcos is expected to outline his administration’s legislative and economic priorities for the final two years of his term.
‘The ‘Progress Bill’ is a combination of tax breaks, revenue-reducing measures and revenue-enhancing measures,’ Go said in an earlier press chat. The measure is intended to benefit lower-income earners and MSMEs, while the revenue-generating component could take the form of ‘sin,’ health or environmental taxes.
This comes after Marikina Second District Rep. Miro Quimbo, chairman of the House Committee on Ways and Means, said the panel would review the personal income tax system to determine whether current exemption thresholds and tax brackets still reflect prevailing economic conditions.
Quimbo said the committee will conduct a comprehensive review of personal income tax brackets, including raising the tax-exempt threshold and reassessing the treatment of bonuses, allowances, and other mandatory deductions. ‘The current personal income tax brackets took effect in 2018. Since then, inflation has significantly eroded purchasing power.’
‘There are many bills filed already. But this will be pushed by the President himself. We are united in pushing for tax reform that will ease the terrible effects of inflation on the salaried middle class,’ Quimbo said in a separate text message to the BusinessMirror.
‘These brackets have not been adjusted since 2018. The law contemplated a regular adjustment every five years. This is timely,’ he told this newspaper.
According to Quimbo, workers earning between P30,000 and P80,000 monthly have been particularly affected because increases in their nominal salaries have often failed to keep pace with the rising cost of food, housing, transportation, electricity, and other necessities.
‘For a salaried worker earning between P30,000 and P80,000 a month-the core of our urban middle class-this has meant that nominal income increases are often eaten up by higher living costs,’ he added.
‘The forthcoming hearings on personal income taxation will focus on the middle-income segment. They are compliant taxpayers but do not benefit from exemptions nor receive ‘ayuda’ while bearing a disproportionate share of withholding taxes,’ he said.
The lawmaker said the proposed tax package seeks to ensure that the country’s tax system remains responsive to economic conditions while maintaining the government’s fiscal capacity.
Quimbo stressed that the proposed reforms must balance tax relief with the government’s need to maintain sufficient revenues for education, health care, infrastructure, and social protection programs.
‘Our task in the next year and a half is to recalibrate the system as a whole-grounded in fairness, efficiency, and credibility,’ Quimbo said.
Several bills seeking to amend the country’s income tax system have been filed in Congress. Among them are proposals to increase the annual tax-exempt threshold, revise the graduated tax brackets, and raise the ceiling for tax-exempt 13th-month pay and other employee benefits.
One proposal seeks to increase the exemption threshold from P250,000 to P480,000 annually, while another House measure proposes raising it to P600,000. Other proposals call for relief from taxes imposed on petroleum products, electricity, water, toll fees, and selected basic commodities.
Quimbo said the objective is to provide meaningful relief to taxpayers without undermining the government’s fiscal position.
Earlier, Congressional Policy and Budget Research Department Executive Director Novel Bangsal said the Tax Reform for Acceleration and Inclusion Law had contributed significantly to government revenue performance.
‘Our monitoring shows that TRAIN has significantly contributed to overall revenue performance,’ Bangsal said.
The TRAIN Law, or Republic Act 10963, took effect on January 1, 2018. It exempted individuals with annual taxable income of P250,000 or below and reduced personal income tax rates for many wage earners. To offset the resulting revenue reduction, the law increased or introduced taxes on petroleum products, automobiles, sweetened beverages, and other goods.