President Rodrigo Duterte walks to the closing and handover ceremony for the Association of Southeast Asian Nations (ASEAN) Summit in Vientiane. Roslan Rahman, AFP

MANILA – President Rodrigo Duterte’s reform program will bring tax exemptions or lower rates to 99 percent of Filipinos, who earn no more that P5 million per year, a finance official said.

Under the proposal, which is pending in Congress, those who earn P250,000 or lower per year will be exempted from paying income tax, undersecretary Karl Kendrick Chua said.

This means a call center agent who earns P21,000 per month will be exempted from tax, according to computations from the Department of Finance.

While the agent’s gross annual income is P273,000, his taxable income is P236,834, still below the P250,000 threshold. This is because his 13th month pay and mandatory contributions are excluded from the computation.

The reform push aims to address the fundamental flaw of the tax system, “very high rates and a very narrow base,” Chua told DZMM.

“Malaking ginhawa ito sa mga workers natin (This will bring great relief to our workers),” he said.

Income tax rates for those earning no more than P5 million will be capped at 25 percent from the current 32 percent, Chua said.

A medical specialist who earns P56,610 per month will pay P90,141 in taxes if the reforms are passed, compared to P137,981 under the current system, according to DOF computations.

Duterte is seeking higher taxes on fuel and cars as well as the removal of some value added tax exemptions to offset losses from reduced income tax rates.

Chua said increased tax revenues would be spent faster as Duterte has solved underspending under his predecessor, Benigno Aquino III, which reached P1 trillion.

Ongoing efforts to streamline the bureaucracy and speedier resolution of right of way disputes will help government projects move faster, he said.