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Philippines: 1.2M Workers to See Higher Take-Home Pay with Increased Tax-Exempt Ceiling
The Philippine government is pushing for a bill to raise the personal income tax exemption ceiling to P350,000 annually. This move is expected to benefit an additional 1.2 million workers by freeing them from income tax, potentially increasing their take-home pay by up to P15,000 per year. The Department of Finance estimates a revenue loss of P60 billion, which they plan to offset through increased excise taxes.
Over a million more Filipino workers are expected to enjoy heftier take-home pay with a proposal to raise the personal income tax exemption ceiling. President Ferdinand "Bongbong" Marcos Jr. has called on lawmakers to expand the exemption to individuals earning up to P350,000 annually, an increase from the current P250,000 threshold set by the Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law. The Department of Finance (DOF) estimates that this adjustment will benefit an additional 1.2 million workers, who will no longer pay personal income tax. This could translate to up to P15,000 in additional yearly take-home pay for these individuals. Currently, about 5.1 million workers are tax-exempt, and this number is projected to rise to 6.3 million once the ceiling is raised. Furthermore, workers earning P350,000 and above could also see up to P17,500 more in annual income tax relief. This means a larger portion of their hard-earned income can be allocated towards daily needs and other expenses, a move intended to boost disposable income and stimulate economic activity. However, the proposed expansion of the income tax exemption ceiling is expected to result in foregone revenues of "as much as P60 billion pesos" for the government. To offset these losses, Finance Secretary Frederick Go indicated that excise taxes are a likely source of additional revenue. While not elaborating on specific items, he hinted that industries currently subject to excise taxes, such as those producing tobacco and sugar-sweetened beverages, could face higher charges. This initiative is seen as part of the government's broader strategy to address income inequality and improve the living standards of the middle class in the Philippines. Nevertheless, concerns have been raised that increasing indirect taxes to compensate for lost revenue could disproportionately burden lower-income groups, making the overall impact on citizens a subject of ongoing observation.
Original source
GMA Money Philippines