ARE FILIPINOS REALLY UNJUSTLY OVERTAXED?

The call for #TaxReformNow has two-parts.  

First, it is all about FAIRNESS.  Filipino taxpayers are calling for the immediate indexation of the existing personal income tax brackets based on movements of the Consumer Price Index (CPI) from the time the 1997 Tax Code was enacted . This is to address the "bracket creep" phenomenon, which has practically raised tax collections for the Government simply through inflation, rather than better tax administration.  Add to this the fact that bulk of individual tax collections have always been borne by salaried workers, who are easy prey to this condition.  

Second, it is about COMPETITIVENESS.  Filipino taxpayers are calling for the lowering of tax rates both for personal and corporate income tax to ensure our country's continued growth and not lag behind our ASEAN neighbors. Lower tax rates, together with the simplification of the tax system, will greatly encourage tax compliance and broaden the narrow tax base. 

The second one we can definitely set aside for now for the next Administration to act on. This will require a comprehensive and holistic approach, as the DOF often puts it. However, we definitely cannt allow the present Administration of President Aquino to just turn a blind eye and stubbornly refuse to address the unfairness of the current tax system.  

Passing a new tax law to simply adjust the existing income tax brackets to inflation would not be that difficult.  They just need to update the income tax table with inflation-adjusted tax base values.

This is how an inflation-adjusted tax table would look like.

And to prove the point about the unfairness of the current tax system, let us check the sample computation below.

Given: Juan used to receive P10,000 monthly basic salary in 1997. He received salary increases to adjust for inflation and his monthly pay is now worth P22,000.

Assuming 13th month pay, Juan's annual salary increased by 115% from 1997 to 2015 (from P130,000 to P286,000) because of inflation.

Under the current tax table, Juan's 2015 income is subject to a higher rate of tax because of the unadjusted tax brackets. Everything has already been adjusted to inflation, except for the tax brackets.  Thus, Juan is clearly overtaxed by P5,350 under the current unjust tax system! 

What else do we need to prove more?

The #TaxReformNow Movement proposes that the inflation-adjusted tax brackets be enacted in this 16th Congress to immediately address this long-standing unfairness in the personal income tax system. This is a simple act of justice that we MUST demand NOW from our leaders in both the Executive and Legislative branches of government.

The P30 billion price tag they put to it will all be worth it... if only to ensure that each and every working Filipino will continue to be taxed at the same rate and receive the same value of net take-home pay in 2015.  Otherwise, Filipino taxpayers will continue to suffer from this injustice until another 2 years when the new Administration comes in and settles down.  And we definitely cannot wait that long anymore.  

Tama na. Sobra na. Income Tax Ibaba! 

Time for #TaxReformNow.

PS - If you believe in this cause by the #TaxReformNow Movement, join the #BlackPayday protest on October 15, 2015. Wear black or change your social media profile pic to black to mourn the unjust, sad state of our current tax system. It's about time for our silent voices to be heard.