Senate President Francis Escudero on Tuesday filed a measure seeking to provide major tax relief and improved access to credit for micro, small, and medium enterprises (MSMEs), aiming to boost the sector that employs 67 percent of the Philippine workforce.

In filing the pro-MSME bill, Escudero proposed several tax reforms and financial support mechanisms designed to empower small businesses, which he described as the "backbone of the economy."

Among the proposed reforms include a three-year income tax exemption for MSMEs and an additional deduction from taxable income equivalent to 25 percent of labor expenses.

He also proposed reducing the optional tax on gross sales or receipts from 8 percent to 5 percent.

To simplify tax compliance, Escudero is also pushing for a streamlined withholding tax structure— 1 percent for goods and 2 percent for services.

On credit access, the Senate President wants to reinstate the mandatory credit allocation for MSMEs by all lending institutions for the next 10 years, saying, "it will help ensure more sustainable financing options for smaller businesses."

“These reforms will allow MSMEs, especially those struggling financially, to continue operations, hire more workers, and even consider expanding in the future,” Escudero said.

The proposed legislation is part of the top 10 priority bills that Escudero aims to push in the 20th Congress.