Sen. Mark A. Villar urged the country’s economic managers to support his proposal to raise the annual income tax exemption ceiling to give immediate relief to Filipino workers while helping revive household consumption and economic activity.
Villar made his call during the Senate Committee on Finance briefing on the proposed 2027 national budget.
He was referring to Senate Bill No. 2137, which he filed, seeking to raise the annual income tax exemption ceiling from ?250,000 to ?360,000. Once enacted, workers earning up to ?30,000 a month would be exempt from paying personal income tax.
‘Kung mababa ang government spending at humihina rin ang consumption. Ang pagpapataas sa income tax exemption ceiling ay magbibigay ng agarang ginhawa sa ating low- at middle-income workers,’ Villar said.
(‘If government spending is low, consumption will also weaken. Raising the income tax exemption ceiling will give immediate relief to low- and middle-income workers.’)
‘Sa halip na hintayin pa ang pamamahagi ng tulong, direkta nang mananatili sa kanilang bulsa ang perang maaari nilang gamitin para sa pagkain, kuryente, pamasahe, edukasyon, at iba pang pangangailangan ng kanilang pamilya,’ he added.
(‘Instead of waiting to be given aid, they will retain in their pockets the money that they can use for food, electricity, fare, education, and other needs of their families.’)
Economic stimulus
During the Senate hearing, economic managers reported a slowdown in personal consumption and a 30-percent contraction of public construction for two consecutive quarters. The decline was attributed partly to high inflation, weaker consumer confidence, and governance concerns that have also affected investments.
According to Villar, raising the exemption ceiling may serve as an economic stimulus by allowing workers to keep and spend more of their hard-earned income.
‘This is a form of pump-priming. May epekto man ito sa revenues, ang perang hindi na kukunin bilang buwis ay maaari namang bumalik sa ekonomiya sa pamamagitan ng mas mataas na household consumption,’ Villar said.
Tax relief should complement – not replace – social assistance for poor families.
‘Hindi ko sinasabing alisin ang ayuda. Mahalaga pa rin ang direktang tulong, lalo na para sa pinakamahihirap at sa mga biktima ng kalamidad. Pero kailangan din nating bigyan ng relief ang mga manggagawang regular na nagbabayad ng buwis at patuloy na nahihirapan dahil sa mataas na presyo ng mga bilihin,’ Villar said.
(‘I’m not saying that aid should be removed. Direct aid is also valuable, especially for the poorest and the victims of disasters. But we have to give relief to workers who regularly pay taxes and continue to suffer because of the high prices of goods.’)
Villar cited Finance Secretary Frederick Go, who pointed out that the administration’s separate proposal to raise the income tax exemption ceiling to ?350,000 could reduce government revenues by an estimated ?60 billion. Go said, however, that around 15 percent of the lost revenue could be recovered through taxes generated by additional consumption.
Broader benefits of tax relief
But Villar stressed that his proposal’s broader economic and social benefits must also be considered.
‘Kapag nangolekta ang gobyerno, kailangan din nitong ibalik ang pera sa taumbayan sa pamamagitan ng mga programa. Kung mabagal ang government spending, dapat nating ikonsidera kung mas episyenteng hayaan ang bahagi ng kita na manatili sa mga manggagawang nangangailangan nito,’ Villar said.
(‘Whenever the government collects [taxes], the money should be returned to the people through programs. If government spending is slow, we should consider whether it’s more efficient to let the workers who need it retain part of their earnings.’)
‘Direkta itong mapupunta sa mga manggagawa. Wala nang mahabang proseso, wala nang distribution costs, at wala nang bureaucratic inefficiencies. Agad nilang mararamdaman ang benepisyo sa kanilang suweldo,’ he added.
(‘It will go directly to workers. There’s no long process, no distribution costs, and no more bureaucratic inefficiencies. They will immediately feel the benefits of their wages.’)
Villa also cited Economic Planning Secretary Arsenio Balisacan, who noted that personal income tax rates were last substantially revised in 2018 and that years of inflation have effectively increased the tax burden on workers within the affected income brackets.
‘In a way, this is an inflationary adjustment. Inaangkop lamang natin ang income tax exemption sa epekto ng pagtaas ng presyo at sa tunay na halaga ng kita ng ating mga manggagawa ngayon,’ Villar pointed out.
(‘In a way, this is an inflationary adjustment. We are just matching the income tax exemption with the effect of price increases and with the real value of our workers’ wages.’)
‘I hope the Department of Finance and our other economic agencies will give this bill strong consideration. Ang anumang epekto nito sa koleksiyon ay dapat timbangin laban sa agarang ginhawang maibibigay nito sa milyun-milyong manggagawa at sa dagdag na siglang maidudulot nito sa ating ekonomiya,’ he said.