Representative Magtanggol Gunigundo of the National Unity Party (NUP) wants individual income tax rates slashed from the current 32 percent to 15 percent to increase the purchasing power of taxpaying Filipinos and  help realize the government’s goal of “inclusive growth.”

Gunigundo, a deputy majority leader of the House of Representatives, said his proposed law would also encourage compliance in tax payments and serve as an economic stimulus.

Besides lowering individual income tax rates, Gunigundo (2^nd district, Valenzuela City)  is also seeking a reduction in corporate income tax rates from 30 percent to 15 percent.

 "Lower taxes mean higher level of compliance. The advantages of having 15 percent income tax rates are enormous," he said in filing House Bill 4099.



For one, Gunigundo said lower income rates will provide  individual taxpayers with additional disposable incomes, which they can either save or spend.

With more consumers buying more goods and services, its positive consequence would be the creation of more jobs by corporations to meet the increase in demand due to this enhanced purchasing power, Gunigundo noted.



Gunigundo pointed out that 40 percent of the Gross Domestic Product is generated by the informal sector, which does not pay taxes. “House Bill 4099 intended to plug revenue loopholes exploited by taxpayers in consonance with unscrupulous officials of the Bureau of Internal Revenue,” he said.

Besides these advantages, Gunigundo also underscored the need to make tax rates in the Philippines more competitive to help prepare the country for the impending economic integration of the Association of Southeast Asian Nations (Asean) by 2015.

“Our tax rates must be competitive enough to attract more foreign direct investments that will generate jobs,” he said. 

Gunigundo’s HB 4099 seeks the amendment of Section 24A (2) of the National Internal Revenue Code (NIRC), as amended.

HB 4099 prescribes the following tax rates: Individual taxpayers with net taxable income (NTI)  of not over P30,000 are exempt from paying income taxes. For those with NTI of P30,000 and above but not over P130,000, the rate is P1,500 + 5 percent of the excess of P30,000.

Those with  NTI of P130,000 and above but not over P280,000, the tax due is P6,500 + 10 percent of the excess of P130,000. An NTI of P280,000 and above but not over P430,000 is taxed P21,500 + 15% of the excess over P280,000.

Individuals with NTI of P430,000 and above but not over P580,000 should pay income tax of P44,000 + 20% of the excess over P430,000, while those with NTI of P580,000 and above but not over P730,000 will have to pay P74,000 + 25% of the excess over P580,000. For those with NTI of P730,000 and above, the tax due is P115,500 + 30% of the excess over P730,000 under Gunigundo’s proposal.

The House committee on ways and means chaired by Rep. Miro Quimbo is now drafting a measure based on Gunigundo’s bill and a similar one filed by Rep. Salvacion Ponce Enrile (1^st district, Cagayan).

The committee has been working with the National Tax Research Center (NTRC) in crafting the bill, and its filing will be done in coordination with Sen. Juan Edgardo Angara, chairman of the Senate Committee on Ways and Means.



Angara has filed a counterpart bill seeking to lower income tax rates.