Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Baie, em £015
v

TUE on =
SEVENTEENTH CONGRESS | : f

First Regular Session a, eee
HOUSE BILL NO. z :

Introduced by HON. ROMERO “MIRO” S. QUIMBO, HON. FRANCIS
GERALD A. ABAYA and HON. ROZZANO RUFINO BIAZON

EXPLANATORY NOTE

Section 28 of Article VI of the 1987 Constitution provides that taxation
shall be uniform and equitable and that Congress shall evolve a
progressive system of taxation.

The existing taxable income brackets, as enshrined in the National
Internal Revenue Code (NIRC) of 1997, have last been pegged using
the 1998 Consumer Price Index (CPI) of 67.8, which is less than half
of the latest 2015 CPI of 141.5!. This means that prices, along with
wages, have more than doubled since 1997 while brackets remained
frozen.

Because tax brackets have been unadjusted while wages have risen,
this has resulted in the phenomenon of bracket creep, wherein
middle-income earners are pushed into higher brackets with higher
tax rates. These middle-income earners are now classified under the
same brackets as the rich and wealthy. ~

To illustrate, 65% of teachers were under Bracket 4 in 2001. Twelve
years later, only 21% of them were under Bracket 4 as more teachers
were pushed in higher brackets?.

* Bangko Sentral ng Plipinas 2016). Economic and Financial Statistics. Retieved at
<hitp:Twew.bsp.gov phistatistioslets_prices.asp>
* Quimibo, M., . Quimbo and X. Javier (2018). “Tax reform for inclusive growth,” Philopine inquirer.


These middle-income earners are also largely made up of the ordinary
wage and salary workers, who have shouldered bulk of the individual
income taxes collected over the years. z

‘This bill seeks to correct the phenomenon of bracket creep by
adjusting the individual income tax brackets to account for inflation.
By doing so, this bill also reinstates the original and noble intention of
the 1997 NIRC to provide an equitable and progressive system of
taxation.

With the additional take-home pay to be enjoyed by wage and salary
workers, Filipino families can now spend more on education and
health, as well as save for the future.

In the last 16t Congress, various stakeholders have reached the
consensus that the country’s income tax system needs to be reformed.
Adjusting the individual income tax brackets to account for inflation is
the initial step for the country to have a tax system that is supportive
of inclusive and sustained growth.

Accordingly, the passage of the measure is earnestly sought.

r ve

Representative
First District, Cavite


f A
RO: [O RUFINO B!

Representative
Lone District, Muntinlupa City


Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 20

Introduced by HON. ROMERO “MIRO” S. QUIMBO, HON. FRANCIS
GERALD A. ABAYA and HON. ROZZANO RUFINO BIAZON

AN ACT
RESTRUCTURING THE INCOME TAX IMPOSED ON INDIVIDUALS,
AMENDING FOR THE PURPOSE SECTION 24 OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and the House of Representatives of
the Philippines in Congress assembled:

SEC. 1. Section 24 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
“SEC. 24. Income Tax Rates. ~
(A) xx
(1) x &
(2) Rates of Tax on Taxable Income of Individuals. -

‘The tax shall be computed in accordance with and‘at
the rates established in the following schedule:

[ Not over P10,000 5%
[ Over P10,000 but not over P30,000 P500+10% of
the excess
over P10,000 ]
[ Over P30,000 but not over P70,000 P2,500+15%
of the excess
over P30,000 ]
[ Over P70,000 but not over P140,000 P8,500+20%

of the excess.


BBRERRERSLBSRIAREBS= S cords

WII rit

‘over P70,000 }

[ Over P140,000 but not over P250,000 'P22,500+25%
of the excess
over P140,000 }
{ Over P250,000 but not over P500,000 P50,000+30%
of the excess
over P250,000 J}
[ Over 500,000 P125,000+32% of the
excess
over P500,000 ]
NOT OVER P21,613, 5%
(OVER P21,613 BUT NOT OVER P64,839 P1,080+10% OF THE
EXCESS
OVER P21,613.
(OVER P64,839 BUT NOT OVER P151,290 5,402+ 15% OF THE
EXCESS
OVER 54,899
‘OVER P151,290 BUT NOT OVER P902,581 P18,370+20%
OF THE EXCESS
(OVER P151,290
(OVER P302,581 BUT NOT OVER P540,323 AB 628+25%
OF THE PXCESS
(OVER P302,581
OVER P540,323 BUT NOT OVER PI,080,645 P108,063+30% OF
‘THE EXCESS
‘OVER P540,923
(OVER P1,080,645 P270,160+32% OF THE
EXCESS
OVER P1,080,645
Xxx
2K

PROVIDED, FURTHER, THAT NOT LATER THAN
‘THREE (3) YEARS AFTER THE EFFECTIVITY OF
THIS ACT AND ~EVERY THREE (3) YEARS
THEREAFTER, EACH TAXABLE INCOME LEVEL
HEREIN STATED SHALL BE ADJUSTED TO ITS
PRESENT VALUE USING THE CONSUMER PRICE
INDEX, AS PUBLISHED BY THE PHILIPPINE
STATISTICS AUTHORITY (PSA).

PROVIDED, FINALLY, THAT AS THE TAXABLE
INCOME LEVELS ARE ADJUSTED TO PRESENT
VALUE USING THE CONSUMER PRICE INDEX,
‘THE BASE AMOUNT OF TAX FOR EACH TAXABLE
INCOME LEVEL SHALL BE ADJUSTED
ACCORDINGLY. i

&

(B) xx ~

(C) x

(D) ==


SEC. 2. Implementing Rules and Regulations. - The Secretary of
Finance shall, upon the recommendation of the Commissioner of
Internal Revenue, promulgate within thirty (30) days from the
effectivity of this Act the necessary Rules and Regulations for its
effective implementation: Provided, That the failure of the Secretary of
Finance to promulgate said Rules and Regulations shall not prevent
the implementation of this Act upon its effectivity.

SEC. 3. Separability Clause. - If any provision of this Act is
subsequently declared invalid or unconstitutional, other provisions
hereof which are not affected thereby shall remain in full force and
effect.

SEC. 4. Repealing Clause. - All laws, acts, presidential decrees,
executive orders, issuances, presidential proclamations, rules and
regulations or parts thereof which are contrary to and inconsistent
with any provisions of this Act are hereby repealed, amended or
modified accordingly.

SEC. 5. Effectivity Clause. - This Act shall take effect fifteen (15) days

after its complete publication either in the Official Gazette, or in at
least a newspaper of general circulation.

Approved,