99% of taxpayers to enjoy higher take home pay — Sen. Angara

Higher take-home pay awaits millions of Filipino workers as the income tax system will finally be amended two decades after it was enacted, Senator Sonny Angara said.

Under the Senate ways and means committee report, the first P150,000 annual taxable income will be exempted, while retaining the P82,000 tax exemption for 13th month pay and other bonuses and the maximum P100,000 additional exemption for up to four dependents.

This translates to an approximate tax-free monthly income of P25,000 for workers with four dependents - in line with President Rodrigo Duterte's campaign promise to exempt workers earning P25,000 and below from income tax.

With this proposal, based on data from the Bureau of Internal Revenue, almost all or 99% of the estimated 7.5 million individual income taxpayers will enjoy lower income tax rates. From the current two million tax-exempt minimum wage earners, the proposed new tax scheme will triple the exempt income taxpayers to around 6 million.

"Our workers are finally getting the tax relief due them. We have been advocating the reform of our income tax brackets and rates for several years now to put more money in people's pockets," said Angara, chairman of the Senate ways and means committee, in a press statement.

For instance, a teacher, who has two dependents, with a monthly income of about P17,254 is currently taxed at 20%. Under the proposal, he or she will be already exempt and will no longer have to pay taxes. The teacher will be able to take home bigger pay and save roughly P13,176 in annual taxes or P1,098 monthly savings.

Another example: a call center agent, with no dependent, earning about P16,136 a month is currently taxed at 20%. Under the proposal, his or her current P20,576 annual tax due will be reduced to P4,557 at a lower tax rate of 15%, resulting to approximately P16,019 annual savings - close to the call center agent's monthly income.