Revised tax rates for salary earners

I got the following from an email that prompted me to do a research on the subject. Searched the web for the exact source of the article but googling just didn't help. I found another link in its stead. For a shorter version of the (linked) article, please read the following paragraphs (am very much sorry for the author but my searches did not point me to your direction).

Higher Tax Exemptions For Salaried Workers Okayed
The House Committee on Ways and Means approved higher personal tax exemptions for millions of salaried workers. The higher exemptions would effectively exempt those receiving the minimum daily wage from paying any income tax.

Tax exemptions would be increased from P20,000 to P30,000 for a single taxpayer, from P25,000 to P37,500 for a head of family, from P32,000 to P48,000 for each spouse, and from P8,000 to P12,000 each for a maximum of 4 dependents. For a family of 6, the increase in exemptions would amount to P48,000 (P16,000 for each working spouse, plus P16,000 for up to 4 dependents). Thus, this family would enjoy exemptions totaling P144,000 under the proposed higher exemptions, compared to P96,000 at the present rates.

The committee also revised the tax rate brackets to which income exceeding the exemptions would be subjected, reducing them from the present 7 to 6.

The tax reform on an individual's tax on wages is thankfuly still subject to the scrutiny of the House (upper and lower). This version differs from another proposal being pushed by Sen. Enrile that IMHO puts the interest of all wage earners at heart. For one, it prompts to move up the old maximum bracket on taxable income from the P500,000 threshhold to P2M (meaning those who have less than P2M taxable compensation incomes are not going to be subject to the highest tax rate, unlike the current situation where a lot of us are paying 32% on incomes over P500,000). Note that the P500,000 max has been in place even before the peso to the US dollar exchange rate reached P7 to US$1. In those times, the dollar value of P500,000 goes to around US$70,000 and is thus somewhat comparable to the tax rates covering US individuals earning the same income.

Please see the comparison table I have prepared below (based on the text of the PhilStar link I gave above) for the new tax brackets and personal and additional exemptions:

Tax Brackets:
Personal and Additional Exemptions:
Focus on the higher tax rates for those individuals whose annual taxable incomes go beyond the P500,000 threshhold (from 32% to 35% for the excess, and from P125,000 to P134,700 for the first P500,000).

After doing so, let us all hold hands and hope for this proposal version to burn in freakin hell. It would take away more of our earnings' purchasing power and will thus not be beneficial to the economy in the long haul. Why? It is not the way a healthy economy works. The Hong Kong model proves this. It does not take a rocket scientist to figure this fact out. Sure, the personal exemptions have increased but, man, look at the rates on our taxable incomes. Preposterous beyond comprehension.

In the passage of the recently passed Tobacco Regulation Act, representatives from leading cigarette manufacturing firms have lobbied at the senate and the congress until the bill has been ratified ensuring that their and the country's interest are considered and weighed side by side. They policed their turfs ensuring of a healthy business environment that is sustainable in a regulated economic climate. In the drafting of the proposed revamp on individual's wage taxes, who, I ask, is looking after the best interest of the salaried workers? Who will serve as a reality check to our legislators?

I would not mind working in a high-tax country for as long as I could see and feel that the government is using the proceeds in something viable and visible.

With the current situation, I'm only thankful for freedom of speech that still lets me write freely to hopefully make a ripple in the consciousness of others.

posted by Fritz @ 12:17 AM