We in this small but brave paper have always firmly held on to the belief that a tax cut is the most potent tool to unleash a powerful surge in economic activities that would propel a steady growth in the overall economy.
Why? Because any tax reduction would free up a tremendous demand for goods and services.
With workers having more disposable income, their purchasing power is increased, leading to more sales generated by producers and retailers.
The faster inventory turnover sustains industrial and manufacturing output requiring more labor and generating higher employment.
With higher corporate income from increased sales, government is able to generate more taxes.
And so the virtuous cycle goes on and sustains itself.
And so we agree with and support Senate President Aquilino “Koko” Pimentel III in prodding his colleagues in the House of Representatives to speed up the passage of the proposal to reduce individual income tax.
Pimentel said he considers lowering personal income tax as an “emergency” that must be immediately addressed by Congress.
“I’m making a personal request to the House to fast-track the income tax reform bill. Either they reduce the rate or do some re-bracketing,” he said in a telephone interview.
“This (reduction in individual income tax) is long sought by our fixed-income earners,” he said.
Pimentel said the Senate ways and means committee, chaired by Sen. Juan Edgardo Angara, cannot make significant progress on the reduction of personal income tax as all tax bills must emanate from the House according to the Constitution.
Angara said it has been two decades since the country’s tax system was reformed or since the enactment of the Comprehensive Tax Reform Program under the Ramos administration in 1997.
“Leaving our tax system fundamentally unchanged through the years has had some very real consequences, especially on the lives of hardworking Filipinos and our national competitiveness,” Angara said, adding the world economy has changed much in the last 20 years.