We recall that in September, President Aquino objected against the proposal to reduce income tax rates. The bill already in Congress calculates for P30-billion revenue losses in government collections and Aquino has not been convinced that reducing taxes would bring any good news to the economy in the sense that the buying power of the people would increase. However, Inquirer.net reports that Speaker Feliciano Belmonte Jr., and Senate President Franklin Drilon are determined to push the bill forward, Belmonte said Monday.
While the President has firmly expressed his disagreement to the bill, Belmonte insists that lawmakers hold a responsibility to the citizens promoting the benefits of the general public from restructuring existing tax law. “Let’s take it up again, I want to discuss it again with the executive (branch),” Belmonte said.
There are two versions of the proposed reform on income tax. One version of the tax reform submitted in Senate and another submitted in the House. But both are almost the same and it would have been quickly approved if there was no threat to veto from the President, Belmonte said.
So, why is the President opposing the reduced income tax bill?
Belmonte said that the tax cut could be Aquino’s “biggest legacies,” remaining hopeful that the President will have a change of heart for tax cuts. But it seems that Aquino is not convinced. He was not convinced that lower income tax guarantee increased buying among consumers. He was not convinced enough that it will help decrease credit rating and increase interest rate.
Rationalized fiscal incentives that corporations receive is one of the precautionary moves that lawmakers take addressing any adverse impact on tax cuts. The Congress proposed a ceiling for tax exemption amounting to P150,000 annually. For the higher income tax, an increase up to P10 million; and a corporate tax cut down 25% from 32% at current rate.