The Department of Finance (DOF) is not amenable to the proposal in Congress seeking to cap the individual income tax rate and raise the tax exemption ceiling on earnings.
Finance Secretary Benjamin E. Diokno said on Wednesday, July 13, that the bill filed in the House of Representatives entitled Tax Reform Act for the Masses and the Middle Class (TRAMM) could be too early.
“We just amended both PIT and CIT ,” Diokno told reporters, referring to the reforms initiated by the previous administration under the Comprehensive Tax Reform Program (CTRP).
Under CTRP’s Tax Reform for Acceleration and Inclusion (TRAIN), those with annual taxable income below P250,000 are exempted from paying PIT, while the rest of taxpayers, except the richest, will pay lower tax rates ranging from 15 percent to 30 percent by 2023.
The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, on the other hand, lowered the CIT rate from 30 percent to 20 percent, while large corporations now enjoy an immediate reduction in the CIT rate from 30 percent to 25 percent.
“Let's give the new tax system a chance to operate. Too early to tinker with it,” Diokno said.
The TRAMM bill filed in Congress seeks to further lower maximum PIT tax rate to 20 percent for individual income earners, as well as raise the income tax exemption to P400,000.
TRAMM also aims to bring back additional exemptions for dependents, raise the cap for tax-free bonuses to P150,000, and the mandate for the Bureau of Internal Revenue to set up a progressive, 10-bracket in the minimum personal income tax schedule.
As Diokno thumbed down the TRAMM proposal, the finance chief has recommended to President Marcos the continued implementation of the Rice Tariffication Law (RTL).
President Marcos earlier said that he would amend or suspend the RTL.
The RTL, which was enacted as Republic Act No. 11203 on Feb. 14, 2019, lifted the quantitative restriction on rice imports and imposed a minimum of 35 percent tariff on imported rice, effectively opening the Philippine rice market.
“ really is a good law. It has a major contribution to our desire to control inflation, so I think it’s not smart to go back to the old system,” Diokno said.
The price of rice has remained low and predictable even during the height of the pandemic, due in large part to the RTL.
On average, today’s Filipino consumer enjoys a price reduction of P7 per kilo of rice compared to its peak in 2018. Households also now have a variety of choices under a liberalized rice trading regime.
Diokno explained that prior to the liberalization of the rice sector, rice was a major source of inflation. Following the enactment of the RTL in 2019, the contribution of rice to inflation dwindled down to negative levels.