5 Things To Know About The Revised Tax Reform Bill

Tax reform may be coming soon if the Comprehensive Tax Reform Plan bill that is pending in Congress will pass muster. The plan is set to simplify the current tax system and bring good news to lower bracket income earners.

The bill is yet to be discussed in the lower house, but according to its author, the congressmen are committed to start the discussions on this soon. Here are 5 things you need to know about the tax reform package, according a GMA News report.

1. The tax reform package aims to simplify the tax system.

This will eventually result in increasing the people’s take-home pay. The bill’s author, Rep. Dakila Carlo Cua, also said that it will result in the decrease of tax rates for most taxpayers over the next few years when the package is being implemented.

Rep. Cua echoes what most tax experts have said about the country’s tax system – that it’s too complicated and burdensome.

2. There is a zero-tax bracket.

Lower bracket income earners, particularly those who only earn 21,000 a month will no longer pay personal income tax. Under the package, these income earners who barely make enough to make ends meet, will fall under the zero-tax bracket.

3. Under the old system, low income earners are at a disadvantage.

Among the examples Cua cited is the case of a call center agent who earns 21,000 a month or a gross yearly income of 273,000 which includes 13th month pay. Under the old system, if this person declares two dependents, he still needs to pay taxes amounting to PhP 21,867 because the net taxable income of PhP 136,834 will still be taxed PhP 8,500 plus an additional 20 per cent of anything in excess of PhP 70,000.

4. Other tax reforms proposed

According to the report, reforms are also being proposed for the estate and donor’s taxes. The package would like to considering lowering the rates for these taxes.

The other side of the coin is the possible increase or adjustment of the automobile and fuel excise taxes. Many people have reacted to this because of the effect it may have on fuel prices.

5. New taxes proposed

As with any other tax reform package, if government is taking away sources of revenue, it needs to create new ones. The bill proposes taxing sugar-sweetened beverages and granting amnesty to estate tax cases so they can be settled soon.