BIR: Income tax collection to decrease
The tax bureau expects a reduction in personal income tax collection starting this year with the implementation of the new tax law, the regional director of Bureau of Internal Revenue-13 in Cebu City said.
Aynie Dizon said she expects a significant reduction in the collection of income tax this year.
The newly passed Tax Reform for Acceleration and Inclusion (TRAIN) Act, which took effect last Jan. 1, exempts compensation earners and self-employed individuals with an annual taxable income of P250,000 and below or those earning at least P21,000 a month from paying the personal income tax. The 13th month pay and other bonuses amounting to P90,000 are also tax-exempt.
"It will surely have a big impact on our collection," Dizon told The FREEMAN.
However, she said the bureau expects to offset the revenue loss from the reduced personal income tax rates through the different taxes such as the increased excise taxes.
The TRAIN will offset the revenue-eroding personal income tax (PIT) cuts with revenueenhancing measures such as broadening the value-added tax (VAT) base; adjusting excise taxes on fuels, automobiles, and alcohol and tobacco products; and introducing a tax on sugar-sweetened beverages (SSBs) with exemptions.
Moreover, under the TRAIN, for those earning P250,000 and above, the tax brackets have also been adjusted so that those with taxable incomes of more than P250,00 each but not above P2 million will pay only between 20 and 30 percent PIT.
Those earning P2 million annually but not above P8 million are taxed 32 percent. The hefty tax of 35 percent are reserved for those earning P8 million and above.
Starting 2023, the brackets will be adjusted further so that those with taxable income of more than P250,00 but not above P2 million are taxed between 15 percent and 25 percent. Those earning P2 million annually but not above P5 million will be taxed 30 percent by 2023, while those above P8 million will be paying 35 percent personal income tax.
In an earlier statement, Finance Secretary Carlos Dominguez III allayed concerns that the adjustments in fuel excise taxes would lead to a ripple effect of higher inflation and higher prices of consumer goods, as the Philippine economy has become more diversified over the years as a result of the sound fiscal management policies of the previous administrations.
Dominguez recalled that when diesel prices spiked by 75 percent in 2016, inflation remained low and stable at 2.7 percent.
Hence, the prices of food, transportation, electricity, gas, housing and water did not increase significantly.