DepDev chief supports income tax relief proposal
Economic Planning Secretary Arsenio Balisacan backed on Thursday a tax relief proposal that would increase workers’ take-home pay by raising the threshold for income tax exemptions from P250,000 to P400,000 annually as well as other compensation, like service charges.
“I am in favor of reducing taxes, especially those that burden the poor and the middle class, but we have to find a replacement for those very much needed tax revenues,” Balicasan told reporters after the briefing on first-quarter economic growth.
“Unless we are able to do that, what you remove might actually hurt the very group that you are trying to help,” said the Department of Economy, Planning, and Development (DEPDev) secretary.
The tax package was outlined in the Granting Increase in Take-Home Pay for All Working Filipinos Act (Ginhawa) proposed by Sen. Sherwin Gatchalian. A similar measure was supposedly being planned in the House of Representatives by 4Ps party list Rep. Jonathan Abalos.
Aside from raising the income tax exemption ceiling from P250,000 to P400,000 annually, the bill also proposes to increase the tax-exemption ceiling for 13th month pay and other benefits from P90,000 to P150,000.
More exemptions
It also exempts various forms of additional compensation, such as holiday pay, overtime pay, and hazard pay, from gross income.
The proposal comes at a time when household purchasing power has been eroded by the ongoing oil shock from the Middle East war, with inflation hitting a three-year high of 7.2 percent and projected to potentially rise further to double digits in the coming months.
For Balisacan, the measure is welcome as it could ease the burden on workers, particularly those in the lower and middle-income groups, but he stressed the importance of ensuring fiscal balance.
He also warned that foregone revenues could affect the government’s capacity to fund critical infrastructure, health and social services.
Data from the Department of Budget and Management showed the government collected P764.6 billion from individual income taxes in 2024. This is projected to rise to P849.5 billion in 2025 and P922.4 billion in 2026.
The 2026 projection, if realized, would account for roughly 13.6 percent of the P6.793 trillion national budget.
“We always urge Congress that if they have to remove a tax, they should find a way to generate a replacement. Otherwise, don’t ask for better roads,” Balisacan said.
