With inflation hitting 7.8%, Yamsuan prods Congress to swiftly pass bills on tax exemptions for workers, micro and small enterprises

Parañaque 2nd District Representative Brian Yamsuan has urged fellow lawmakers to swiftly act on pending measures that aim to provide tax relief to wage earners, micro businesses and small enterprises as Congress resumes session this week.

Yamsuan said bills seeking to raise the annual personal income tax exemption threshold and abolish the Minimum Corporate Income Tax (MCIT) for micro and small enterprises (MSEs) would help ease financial pressures on Filipino families and businesses struggling to cope with rising prices and the weakening peso.

“With a devalued peso and inflation surging to 7.8 percent in October, Filipinos now find their purchasing power considerably eroded. Ang dating mabibili mo sa halagang P100 ay tumaas na sa P107.80 dahil sa inflation. We haven’t even factored in yet the effects of the super El Niño on our economy,” Yamsuan said.

“Given these challenges faced by our kababayans, the tax relief measures now pending in Congress will help stretch their spending capacity and ease their financial burdens,” Yamsuan said.

Yamsuan has filed House Bill (HB) 10577 that aims to increase the income tax exemption ceiling for individual taxpayers from P250,000 to P450,000 annually, and HB 10578 on removing the 2 percent MCIT imposed on the gross income of MSEs.

The House Committee on Ways and Means has already approved the bills filed by Yamsuan, Speaker Bojie Dy, Majority Leader Sandro Marcos and other lawmakers providing for the 2 percent MCIT abolition for micro and small businesses.

Chaired by Rep. Marikina 2nd District Rep. Miro Quimbo, the panel also approved a measure raising the personal income tax exemption, but at a lower level of P350,000 annually.

“When the ways and means panel approved these tax relief measures in August, inflation was at 6.2 percent. This rate accelerated to 7.2 percent in September and again to 7.8 percent last month. We don’t know if this will spike further once the effects of the super El Niño on the economy kick in,” Yamsuan said.

“We leave it to our economic managers to determine if the P350,000 threshold for personal income tax exemption is enough or needs to be raised to help low- and middle income families survive amid the difficult times we are facing and will continue to face next year,” Yamsuan said.

Yamsuan noted that when the Tax Reform for Acceleration and Inclusion (TRAIN) law was passed in 2017 providing for the current annual tax exemption ceiling of P250,000, Congress’ goal was to provide this benefit to minimum wage earners and the lower-middle income sector.

However, over the years, the purchasing power of Filipinos further declined, with a basket of goods previously priced at P1,000 in 2018 now costing P1,300 today. Those previously classified as being part of the mid-middle income class in 2017 eventually fell to the lower-income category in 2021.

“These developments demonstrate that the current tax exemption threshold no longer protects the most vulnerable from income poverty. Kapag hindi itinaas ang income tax exemption level, baka maging ang mga lower middle income families ay mapunta na sa laylayan ng lipunan,” Yamsuan said.

As for MSEs, the economic woes they now face with a high inflation rate and a weak peso have been exacerbated by the recent increases in the daily minimum wage for Metro Manila and other regions.

Yamsuan said continuing to impose the 2 percent MCIT would further burden struggling micro and small businesses because this tax is calculated based on gross income, without the benefit of allowable deductions.

“This means that even with MSEs barely breaking even or earning very little, they will still have to pay the MCIT. Removing this tax will not only provide them relief, they can possibly even use the tax savings to improve their daily operations or retain their employees,” Yamsuan said. ###