MANILA - The Department of Finance (DOF) submitted to Congress on Monday the first package of tax reforms to Congress, which includes the lowering in personal income taxes for low- and middle-income earners but higher levies for high-earning individuals.
The changes in personal income tax rates include reducing the maximum rate to 25 percent from 32 percent, and shifting to a simpler modified gross system.
The finance department said the tax reform is crucial to government's goal of inclusive economic growth.
From an earlier estimate of P200 billion, the DOF now expects to generate P291 billion from its updated tax reform proposal.
Under the package, compensating measures for the planned lower income tax rates are rationalization of value-added tax exemptions; higher excise for fuel, tobacco, alcohol, and automobiles, as well as imposing sugar tax.
Tax reform is crucial to the task of reconfiguring the Philippine economy to attain the Duterte administration’s goal of inclusive growth, Finance Secretary Sonny Dominguez said.
“Without reforming our tax system so that it becomes fairer, simpler and more efficient, government cannot undertake the volume of spending required in achieving our goals of reducing poverty from 26 percent to 17 percent in six years and elevating the Philippines to the status of a high-income country in one generation,” he said.