Senator Cynthia Villar files bill to lower income tax rates of workers

Filipino workers have a reason to be happy if Senator Cynthia Villar's bill will be approved and become a law in the near future.

Villar filed Senate Bill 147, seeking an adjustment in the income tax rates, which will greatly benefit all workers belonging to different income tax brackets.

(Image Credit: Senate of the Philippines)

Senate Bill 147 is primarily meant "To ease the burden of our Filipino workers, and for our country to be at par with regional standards and to make the Philippine workforce more competitive with its neighbors," Villar said. The bill will specifically amend Section 24 of the National Internal Revenue Code of 1997, as amended.

Sen. Villar said that the Philippines has one of the highest income tax rates in the Association of Southeast Asian Nations (ASEAN), surpassed only by Vietnam and Thailand.

The new reduced income tax rates proposed in Senate Bill 147 will make Filipino workers grin from ear to ear, since it offers big reductions compared to present tax rates.

For example, the lady senator is proposing that those with taxable incomes of not more than P20,000 will have 5% tax rate beginning January 1, 2016. Compare that to the previous rate of 5% for those with taxable incomes of not over P10,000.

Here's the breakdown of income brackets and tax rates as proposed by Villar in Senate Bill 147:

Taxable Income                               Tax Rate

Not over P20,000                          -  5%

Over P20,000 but not over P60,000 - P1,000 + 10% of the excess over P20,000

Over P60,000 but not over P140,000 - P5,000 + 15% of the excess over P60,000

Over P140K but not over P280K      -  P17,000 + 20% of the excess over P140K

Over P280K but not over P500K     - P45,000 + 25% of the excess over P280K

Over P500K but not over P1M       - P100,000 + 30% of the excess over P500K

Over P1,000,000                         -P250,000 + 32% of excess over P1 M

Compare that with the present tax rates:

Taxable Income                           Tax Rate

Not over P10,000                         - 5%

Over P10,000 but not over P30,000 - P500 + 10% of the excess of P10,000

Over P30,000 but not over P70,000 -P2,500 + 15% of the excess over P30,000

Over P70,000 but not over P140,000 -P8,500 + 20% of the excess over P70,000

Over P140K but not over P250K      - P22,500 + 25% of the excess over P140K

Over P250K but not over P500K      - P50,000 + 30% of the excess over P250K

Over P500,000                             -  P125K + 32% of the excess over P500K 

Just by looking at the proposed reduction in income tax rates, we are sure that a lot of individual taxpayers are already computing the additional disposable income they will have once Senate Bill 147 is approved.

A few thousand pesos of additional disposable income will go a long way for millions of Filipino workers who live by very tight budgets.

And even if it means lower income tax collection for the government, that disposable income will be pumped back to the economy, anyway. Only this time, it will come from the taxpayers and not from the government itself.

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