Tax expert Mon Abrea pointed out that as inflation erodes real incomes, tax brackets are largely unchanged.
“Filipino workers are effectively paying more without earning more. This ‘bracket creep’ is a silent but persistent burden on the middle class.”
The Philippine tax system suffers from a structural imbalance. Around 82 percent of personal income tax collections come from salaried workers — those whose taxes are automatically withheld.
Less than four percent is collected from high-net-worth individuals. This is not just a statistic, Abrea says, “it is a signal of inefficiency and inequity in the system. The disproportionately low contribution from high-net-worth individuals highlights severe inequities and compliance loopholes within the system.”
That’s because salaried workers are easily tracked, but the self-employed, professionals and business owners often operate under self-assessment regulations that allow for easy income underreporting or expense inflation.
The policy direction should be to achieve greater tax equity. We should prioritize tax relief for workers suffering from rising inflation the government can’t fix.
Increasing the tax-free income threshold should be a no-brainer. It directly empowers the middle class. It improves take-home pay, strengthens purchasing power and enables families to save, invest or spend based on their real needs.
As Abrea pointed out, the proposed phased approach — from P400,000 in 2026, P800,000 in 2027 and P1 million by 2028 — ensures fiscal manageability while delivering immediate and predictable relief.
It is obvious that our government is taking the easy way of collecting taxes by focusing on the salaried middle class and on consumption taxes like VAT. But this makes our tax system very regressive and protective of the rich at the expense of the middle class.
In street lingo, trabahong tamad kahit mali.
Philstar.com
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