The House of Representatives’ ways and means committee plans to conduct a ‘comprehensive review’ of the country’s personal income tax regime, Marikina Rep. Miro Quimbo, who chairs the panel, said on Sunday, in a move aimed at delivering financial relief to middle-income Filipino earners.
In a statement, Quimbo said the chamber’s tax panel would tackle pending bills aimed at recalibrating the Philippines’ income tax brackets, including its tax-exempt threshold and exemption of bonuses and allowances to ‘better reflect today’s economic realities.’
He gave no further details about when his committee would meet or what bills would be discussed. But at least two related measures are listed as pending on the congressional website.
‘Eroded purchasing power’
‘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.
Persistent inflation has spurred the committee to review the income tax system, according to Quimbo.Inflation stood at 6.4 percent in June, easing from May’s 6.8 percent print, according to Philippine Statistics Authority data.
Price gains have breached the central bank’s 2 to 4 percent target since March, driven by oil shocks from the Middle East war, which has spiked fuel, electricity, and food costs.
‘The current personal income tax brackets took effect in 2018. Since then, inflation has significantly eroded purchasing power,’ the lawmaker said, noting that middle-income Filipinos have borne the brunt of the current tax structure under the Tax Reform for Acceleration and Inclusion Act (Republic Act No. 10963).
‘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 said.
Fair taxation
The price pains have also come against the backdrop of a sputtering economy which registered a weaker-than-expected 2.8 percent in the first quarter.
Quimbo said the committee’s review of income tax bracketing aims not only to bolster household spending but also to sustain economic growth and to ensure fair taxation without disrupting collections.
‘The forthcoming hearings on personal income taxation will focus on the middle-income segment,’ he said. ‘They are compliant taxpayers but do not benefit from exemptions nor receive ‘aid’ while bearing a disproportionate share of withholding taxes.’