The Little Carrot and the Mammoth Stick
The proposal to reduce the rate of the Philippine income tax is now a pending bill for legislation. There are various version of the bill but all are aimed at slashing the Individual income tax and the corporate income tax from its current rate of 32 percent and 30 percent respectively. At a glance, the move is a welcome development and may be recognize as a pleasant milestone in history of taxation. But is it? The initial package of reforms, the first of 4, includes the restructuring of the personal income tax system and the expansion of the value added tax (VAT) base by reducing the coverage of its exemptions, the DOF said in a statement. The maximum rate of personal income tax will be reduced over time to 25% from the current 32%, except for the highest income earners . Also included in the package is raising fuel excise tax , and restructuring the excise tax on automobiles with exceptions for buses, trucks, cargo vans, jeeps, jeepney substitutes, and special purpose