BIR open to lower income tax rates

Unlike in previous tax reduction measures, the Bureau of Internal Revenue (BIR) is not opposing a pending bill in Congress seeking to reduce the individual income tax rate from 32 percent to 25 percent.

BIR Commissioner Kim S. Jacinto-Henares, however, said lawmakers should likewise offer ways and means to reduce government expenditure.

"If lawmakers want to cut down the tax rates so be it, but they should also reduce government expenses, for housing, and education," the BIR chief said.

She also suggested that Congress should also come out with alternative measures to fill up or minimize losses from this source.

The proposed measure is being finalized by House Ways and Means Committee before sending it to the floor for deliberation.

Henares could not make estimates of the tax losses if the bill becomes a law, but other revenue officials described possible foregone revenues as “very big.”

Records showed that income tax collected from business and individuals constitutes roughly 60 percent of this year's collection goal of 1.6 trillion.

It was not immediately, however, known how much of this take is contributed by individual taxpayers, mostly salaried and self-employed.

Proponents of the bill said the reduction of the tax rates would greatly benefit the middle income group, enhancing their purchasing power.

They explained that taxpayers would use the tax savings to buy goods and services which are subject to either value-added or percentage tax, thus reducing the expected income tax shortfall.

BIR insiders said the approval of the legislation would depend entirely on the decision of President Aquino and make his anointed presidential bet more popular to the electorate-taxpayers in next year's national elections.

They said the President can give the go-signal to his political allies who control both the Senate and the House, even as opposition parties also desire for the early approval of the proposed legislation.