For the third quarter of this year, the RDC 2 – Committee on Development Administration and Communication (CODAC) endorsed their support to two Senate Bills that aim to lower the level of net taxable income and to exempt start-up businesses from paying taxes.

During the 3rd quarter joint meeting of the Regional Development Council (RDC) 2 and the Regional Peace and Order Council (RPOC) 2, CODAC Chairperson and Cauayan City Mayor Bernard Faustino M. Dy reported that the Philippines has one of the highest tax rates in the ASEAN Region and that most of the tax burden falls on the working class.

To help the wage and salary workers cope with the diminishing buying power of the peso as an effect of inflation, as well as with the increasing costs of living every year, Senate Bill 1942 was pushed to lower the level of net taxable income and tax rates on individual income tax.

“The proposed tax reform will increase disposable income and will allow workers to enjoy a higher net income,” Mayor Dy said during the joint meeting held on September 30, 2015 in Cauayan City, Isabela.

“It will provide a positive behavioral response on people’s spending and consumption and will also eventually reduce revenue collections,” he added.

Authored by Senator Paolo Benigno “Bam” Aquino IV, SB No. 1942 seeks to amend a section of the National Internal Revenue Code passed in 1997 so that lower taxes will be imposed on the Filipino working class, which comprises about 22 million of the nation’s population.

Mayor Dy further said that when approved, the Bill will lead to the alignment of the new taxes with the prevailing range of tax rates in the ASEAN Region.

Recognizing that the proposed tax reform will benefit workers not only in Region 2 but also nationwide, the RDC 2 and the RPOC 2 jointly agreed to endorse the resolution supporting the lowering of income tax rates in all income classes.

Also, the endorsed resolution exhibited the support of the two councils in the adjustment of income tax brackets and tax rates based on current prices and classification of income class.

Tax exemption for start-up enterprises

The CODAC Chair also presented details of SB No. 2217 which seeks to exempt start-up businesses from paying taxes for the first two years of operation.

Start-up enterprises include newly-registered businesses engaged in industry, agribusiness, and/or services whether single proprietorship, cooperative, partnership, or corporation.

“This Senate Bill encourages newly-registered businesses to get organized and establish their operations and market base,” Mayor Dy stated. “However, to be covered by the Bill, new businesses should be duly-registered and should not have any previous or other existing registered businesses.”

Again authored by Sen. Aquino, SB No. 2217 aims to foster inclusive growth by encouraging the creation of enterprises that would facilitate job creation, innovation, and trade in the country.

According to the latest data from the Philippine Statistics Authority, a total of 28,406 establishments are found in Region 2. This comprises only 3.01% of the total 945,004 micro, small, and medium enterprises (MSMEs) in the country.

MSMEs remain as critical drivers and potential sources of output of the country especially towards its transition to a more industrialized economy. Hence, it received a positive endorsement of support from the RDC 2 and the RPOC 2.#