Tax Reform Under

Duterte Administration

TAX REFORM UNDER

HIS
ADMINISTRATION

DUTERTE: Improve tax system by

indexing tax collection to inflation
rate
PNoy: Lower income
tax rates
will not help Filipinos

A major concern when discussing tax reform is that it can

easily affect inflation.
Inflation is everywhere and can never be non-existent.
People experience it every single day as the price of the
goods and services fluctuates over time. As incomes go up,
the cost of living generally goes up too, partly because of
inflation. But unfortunately, the current tax system in the
Philippines is not devised to take account of inflation.

Hidden Tax
Hike

Bracket Creep (Also known as Hidden

Tax Hike)
is the effect of inflation
is the movement into a higher tax bracket as
taxable income increases.

Tax Indexing

is a method used for adjusting tax rates for

inflation and is designed to solve the hidden tax
hike

JC makes Php240,000 a year and is in the 25% income

tax bracket. The tax rate is 30% for income that is
Php250,001 to Php500,000. JC is in the 25% tax bracket,
but over the course of a few years, his salary adjusts up
to Php300,000 due to a series of cost-of-living
allowances. Because of inflation, JC's Php300,000 salary
buys the same amount of goods and services that his
Php240,000 salary did, but now he's in the 30% tax
bracket.

JC has experienced "bracket creep," which happens

when inflation drives income up and into higher tax
brackets. As a result, JC may have gotten a Php5,000
raise from his original Php20,000 job, but after factoring

PNoy rejects lower income tax

rates proposal
Lower government revenues that
would lead to tax deficit
Decrease in income taxes = Increase
in VAT

So why lessen on the rates that should have

been there where there is a limit but only to
be increased where it would affect our daily
expenses where it would impact especially
the lower classes?

Angara files income tax

reform
bill

calling for reforms for the countrys

outdated and inequitable taxation
system, one that has been unchanged
since the Marcos regime.
Senate bill 2149
BIR Commissioner Kim Henares: open
to lower income tax rates
Department of Finance: strongly
against

Senate bill 2149

seeks to adjust and compress the tax
brackets
seeks to reduce the maximum tax rate from
the current 32% to 25% by 2017

Republic Act No.

Expanded Value9337
Added Tax
Act of 2005

November 1, 2005: increase in

corporate income taxfrom the
current rate of32% to 35%.
Effective on January 1,
2009:corporate income tax shall
be reduced to 30%.
VAT: increase from 10% to 12%

 VAT: increase from 12% to

14%
Reduction of Exemptions
No need to increase VAT
Efficient way: reduce
corruption

The Sin Tax Law helps finance the Universal

Health Care program of the government,
simplifiedthe current excise tax system on
alcohol and tobacco products and fixed long
standing structural weaknesses, and
addresses public health issuesrelating to
alcohol and tobacco consumption.

Why are we supporting it?

1. To promote health by discouraging vice.

2. To collect more revenue for healthcare.

 Under the law, 85 percent

of incremental revenues
must go to universal
healthcare program
According to the Department
of Health (DOH), the
Philippines has an estimated
17.3 million tobacco
consumers, the most number
of smokers in Southeast Asia

CONCLUSIO
N