Marcos wants tax relief for middle class this year

MANILA, Philippines — President Ferdinand Marcos Jr. is pushing for the passage this year of the proposed tax reforms that would provide tax relief for the middle class, Malacañang announced on Tuesday, August 4.

The tax reform, which the Department of Finance (DOF) calls the "Progress Bill," proposes raising the income tax threshold to P350,000, expanding sin and wealth taxes to compensate for the expected revenue losses, and imposing higher wealth taxes.

During a press briefing on Tuesday, Palace Press Officer Claire Castro said Marcos is aware that the Department of Finance (DOF) is currently working on the Progress Bill and wants it passed as soon as possible.

“Kasalukuyan itong binubusisi ng DOF kasi nais po ng pangulo na ito ay maipasa sa pinakamabilis na panahon,” Castro said. “Ang nais po sana ng pangulo ngayong taon.”

(The DOF is currently reviewing it [Progress Bill] because the president wants it to pass immediately. The president wants it to be this year.)

Less tax for middle class

Finance Undersecretary Karlo Fermin Adriano said on Monday, August 3, that the proposed Progress Bill aims to address “declining purchasing power and creeping taxes” by providing tax relief to middle-income workers.

The measure aims to exempt those who earn less than P350,000 per year from paying personal income tax by raising the threshold from the current P250,000. This means that if the measure passes, there would be no more withholding tax deductions from the salaries of workers earning P29,000 or less per month.

These adjustments per income bracket were also proposed:

• Workers earning P351,000 to P450,000 per year:15% of the excess over P350,000
• Workers earning more than P451,000 to P800,000 per year:P15,000 + 20% of the excess over P450,000

The DOF said workers within these tax brackets could save up to P17,500 in annual taxes should the proposed reforms pass.

More tax on sin, wealth

The DOF said the income tax reforms would reduce government revenues by P300.33 billion from 2027 to 2030.

To make up for these losses, the DOF proposed increasing excise taxes on sweetened beverages, liquor, e-cigarettes, and vape devices.

Based on a report by BusinessMirror, the government could generate P296.97 billion from 2027 to 2030 through the proposed increase in excise taxes on sweetened beverages.

Higher excise taxes on liquor and distilled spirits, with annual indexation of 6% starting in 2031, could also generate P31.36 billion.

The proposed higher taxes on e-cigarettes, vape devices, and novel tobacco products, meanwhile, could yield P33.06 billion over the same period.

Tax the plastics. The DOF is also seeking to impose a P150-per-kilogram tax on plastic products, with annual indexation of 5%, which could generate P52.19 billion.

Tax the rich. The DOF also seeks to address unequal taxation by proposing a higher excise tax, including a 75% tax rate on automobiles costing more than P8 million.

The department also aims to impose an excise tax on private jets by classifying them as non-essential goods.

Should the proposal pass, the government could earn P15.64 billion from 2027 to 2030.

The DOF is also eyeing an adjustment to the motor vehicle road user tax based on cumulative inflation to fund road maintenance, which is expected to generate P89.58 billion over the same period.

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