Income tax overhaul eyed amid high prices

As price shocks due to inflation have continued to affect consumers’ purchasing power, House Committee on Ways and Means chairperson Rep. Miro Quimbo expressed that the panel will look to tackle measures to provide relief through a recalibration of the personal income tax system.

Quimbo said that the committee would review the tax schedule on bonuses, allowances, and other salary deductions to allow various tax brackets to cope with the rising price of goods and services in the market.

“The current personal income tax brackets took effect in 2018. Since then, inflation has significantly eroded purchasing power,” he said.

“For a salaried worker, earning between P30,000 and P80,000 a month…this has meant that higher living costs often eat up nominal income increases,” he added.

In the Inflation Report Consumer Price Index from the Philippine Statistics Authority (PSA) in June of this year, the inflation rate was reported at 6.4 percent — a continued decline from the year-long high of 7.2 percent in April.

Fares steady

The PSA further noted that the downtrend in inflation was based on the slower annual increase in the transport index, which was said to be at 12.8 percent from a rate of 16.2 percent last May when the shocks in oil prices in the country were most felt because of the ongoing tensions in the Middle East.

Another factor the agency said contributed to the lower inflation was slower growth in the food and non-alcoholic beverage indices, and in furnishings, household equipment, and routine household maintenance.

For Quimbo, the need for review on taxation was not solely based on how the government could profit from the financial charge but whether taxes had become too overbearing for sectors such as middle-income and lower-income households.