Press Release
March 18, 2014


PINKY WEBB: Joining us in the studio is the Chairman of the powerful, Senate committee on ways and means, Sen. Juan Edgardo 'Sonny' Angara. Sen. Angara, good morning to you and thanks for coming over.

SEN. JUAN EDGARDO ANGARA: Good morning, Pinky. Good morning to the viewers of ANC.

WEBB: I'm smiling because obviously I like your Senate bill.

SJEA: A lot of people like it.

WEBB: I'm sure a lot of people also watching must love this bill. But we're gonna get into the details of this bill. First is, why did you think about this? During your campaign, was this a campaign promise of yours? I don't remember it to be one.

SJEA: No, it wasn't. In fact getting the committee on ways and means was very unexpected on my part. It wasn't something I aspired for. I was aspiring for either the education or maybe the health or trade committees but we ended up with that and we studied the tax system and medyo luma na s'ya. In fact, our tax rates, date back not only in 1997 but even in 1977 during the time of President Marcos.

WEBB: Because 1997 was the last time we actually, they actually changed the bracket.

SJEA: We had a new internal revenue code in 1997.

WEBB: Right. So that's what, probably '97, 2007, you know... More or less.

SJEA: 17 years.

WEBB: 17 years. Alright, so this is something you wanted to change. True, because wasn't the chairman of the Senate ways and means committee before, was it Sen. Recto?

SJEA: For a long time it was Sen. Ernile, then after that, Sen. Recto.

WEBB: Right. So, you got this committee, a very powerful committee. You, all of a sudden, put focus on taxes. Why? Lumapit ba sa'yo ang mga tao? Was this something that you said, you know it needs to be changed. It's a little too much.

SJEA: Actually, hindi naman lumapit ang tao sakin at sinabing, babaan n'yo naman ang taxes. Pero naririnig ko lahat tumataas, nagrereklamo sila. Nagrereklamo sila sa MRT, sa presyo ng kuryente. We had that last December, diba? Our electricity bills went high, and then they're complaining about the price of food also.

WEBB: Gas.

SJEA: And I'm thinking, what can the government do for these people, diba? And then tiningnan ko, what about the tax system? Tingnan natin kung in step nga ba tayo with the current developments. Adne everyone in ASEAN, Pinky, is lowering their tax rates for individuals, even for corporate. Because nakikita nila we're emerging into an era where it's going to be more competitive.

WEBB: Right. You're talking about the ASEAN integration. That's the reason why we also did this K to 12. That's part of the ASEAN integration. We're also talking about the ASEAN blueprint. Let's give examples. The senator has of course researched on this and look at at this... Looking at income, individual income tax bracket. We're third of the highest. Number one is actually Thailand, and the second one is Vietnam. So Thailand has 37%, senator. Vietnam has 35% and we are there at 32%. That's a lot, actually. I'm gonna say, that's a lot from my salary as well.

SJEA: It's one third, Pinky. Easily. And then don't forget the government also gets from PhilHealth, from PAG-IBIG and for social insurance like GSIS or SSS. So effectively, you're giving 45% and then there's Value-Added Tax on all your transactions. So maybe half your income goes to the government.

WEBB: I'm gonna be selfish and put a little focus on this individual income tax. So at 32%, what is the plan? I understand that this is going to be a staggered decrease up to 2017. Tell us more about it.

SJEA: Well, in my initial bill, it's up for discussion, ano? I throw it to the BIR to give us ana alternative. I want the three-year adjustment period. So from 32, we go to 28 and then to 25 on your third year, finally. And we also... We don't just adjust the rates, the percentage taken from your income. So we adjust the threshold. Yun ang importante e. What our Constitution says is that you must have a progressive system of taxation, meaning, if you're richer, you pay more. You have the capacity to pay more. If you earn just a little, the government will not take much from you kasi nga kailangan mo yun e. Kailangan mo yun para sa edukasyon ng anak mo, para sa bahay n'yo, pangbayad ng inyong mga bilihin o bills. So dito nawawala na yun pagka-progressive natin dahil the 500,000 threshold for the top-earning people has been there since 1977. Can you imagine?

WEBB: So that didn't change since 1977?

SJEA: Can you imagine how cheap things were in 1977? Ano yung presyo ng bigas? Ano yung presyo ng isda noong 1977?

WEBB: And I guess, of course, that goes down to cost of living. So of that is 32% for individual tax payers down to 25%, really that's a fourth of what you actually earn. Mind you, that's still quite big. But that is so much better than 32% which is a third of what you actually earn.

SJEA: We're hoping that this will induce voluntary (inaudible) There are studies that show that as we lower the tax rates, compliance can get better. But the assumption there is you have a credible tax collector. And if anything, kay BIR Commissioner Kim Henares, natatakot ang tao, and their belief also is ginagastos naman ng Aquino administration in the right way. So for me, it's the right time.

WEBB: So what is your philosophy behind this? If we have more money for ourselves spending...

SJEA: .. (inaudible) purchasing power increase. Because obviously what do people do, they will spend it for their children, they will spend it for education, they will spend it to buy things for their home, to buy a home, all these transactions may tax. WEBB: Okay. The scary part is you probably don't have the BIR as an ally here. Because I think it was the Department of Finance undersecretary, I believe, who said that we stand to lose about P43-billion up to 2017 if your Senate bill is passed.

SJEA: That's right. That's Usec. Paul of the DOF. He said, well in the first year I think only P1-2-billion, in the second year P19-billion and in third year P43-billion na. But yun nga one sided yun, wala pa yung computations on how much the government will earn on other taxes.

WEBB: I see. Would there be a counterpart to this? I mean if this bill is passed, your bill is passed, would it be possible in order to (inaudible) the loses incur that other VAT increase? Are you in favor of that? SJEA: Well, right now that's worth examining but 12% is already quiet high for a VAT. So what we're looking at is the other reforms of DOF and BIR pushing. That's the modernization of Customs, computerization, yung incentives, the incentives will give, (inaudible). The DOF were working together with BIR...

WEBB: Alright let's go into details. Let's show them a graphics of what this Senate bill really is all about. For those of you are earning a certain bracket, is this a month senator? SJEA: Year.

WEBB: Alright let's start with this, maybe you can explain it to us. A tax base of P10,000 meaning this is what you earn.

SJEA: If you earn P10,000 right now, you're paying 5%. That's not your gross income (inaudible). Then pag P10,000-30,000 it goes higher. It's progressive in that sense, pero konti lang ang kumikita dyan. Majority of the population earn in the higher...

WEBB: ...People who earn P10,000, those who are earning P10,000 will have to pay a tax rate of 5%.

SJEA: Yes.

WEBB: Which is I believe P500.

SJEA: Yes.

WEBB: That's P500. So they pay P500 tax. Is there no tax holiday? Tax fee zone here?

SJEA: If you're minimum wage earner.

WEBB: Okay. So that's P10,000 a month?

SJEA: P10,000 a year. So talagang mababa, dapat hindi na tinatax yan Pinky sa totoo lang.

WEBB: I know...

SJEA: If you look at the right side, that's our version we want to make it P20,000 at least. Sa P10,000 ano ang nabibili nyan in one year.

WEBB: Its 800 a month. Alright, so kasi yan, were looking at the existing on your left and the one in right?

SJEA: This is my bill.

WEBB: Okay if it is your bill, why is there a 15% in 2015, 2016 and in 2017, 10%?

SJEA: We put a bracket from P20,000-70,000. Yung P10,000 dati wala na yun.

WEBB: Wala na yun, tanggal na yun. So if you earn P20,000 but not over P70,000 you're on that range, in 2015 they will tax you 15%, in 2016 it goes down by 2% to 13% and then it goes down again to 10%?

SJEA: Pag 10%, siguro willing na yung tao di ba. Para hindi na siya kukulitin ng BIR.

WEBB: That's right, hindi siya ganon kalaki. Okay, and then for those who are earning over P70,000 let's expect that P70,000 is more or less 5,000 a month.

SJEA: P5,000-6,000 a month.

WEBB: P6,000 a month. Let's go back again, P70,000 you earn about P6,000. How much tax you will pay?

SJEA: Right now you are paying 15% at P20,000. And then under our bill it's just P70,000. You just pay about 20%.

WEBB: No, P20,000 but not over P70,000 is 15% in 2015.

SJEA: Right. I'm sorry. Yeah, yeah, we're lowering it. (Laughs)

WEBB: Yeah, you're lowering it, and then it goes again, tama mababa na yung P10,000. It's alright. Let's go to over P70,000 but not over P200,000. Is this is what you say the normal range that people would earn in a month? Probably 'no?

SJEA: Well, if you work in a call center. Let's talk about an entry level, that's P25,000. You're earning about P25,000 a month, you're already...or maybe P20,000. You're already paying 25% Pinky.

WEBB: Wow, okay.

SJEA: So, you're already in the second to the highest tax bracket, third to the highest tax bracket. And that's an entry level job.

WEBB: That's true. Kakapasok mo pa lang e.

SJEA: So, how can a country build your middle class? And build a responsible citizen if you're overtaxing your citizens? How can they provide for their future for their family?

WEBB: Very nice. Alright. And then, it goes, I guess we can show it again, the graphics we have, so,yeah, tapos na tayo dyan, P10,000-P30,000. And then we went to the next matrix, P70,000 - P140,000. If the bill of Sen. Angara is passed, that is, you pay, ang laki pa rin 'no?

SJEA: Twenty two percent.

WEBB: Oo, you still pay 22%. Alright, and then you pay 30% of the excess over P500,000.

SJEA: You know Pinky, this is just an initial... in a sense, it's what you call in the US, the discussion draft. It's for us to discuss and it's all (inaudible). The point is, the principle of lowering and leaving something in the pocket of our population that should remain.

WEBB: I'm very interested to find out from you Senator. How much research did you do for this? I mean, what made you decide with the type of percentage that you are presenting in this bill?

SJEA: Well, we looked at the tax rates in the region, the indicative tax rates and how much they're earning. And at tax rate, if you're making $11,000 a year, that's less than a thousand dollars a month, you're already in the top tax bracket. If you're earning the same in Singapore, you're only paying 10%. So, talagang, if you're a professional, and you're thinking, "Saan ako magta-trabaho? Saan ako makakaipon?" Hindi sa Pilipinas, right now.

WEBB: So, it's good you've actually focused on this.

SJEA: Well, no choice, it's my committee e, so...

WEBB: Pero ibig kong sabihin, ang hirap po kasi sa mga nagtatrabaho, wala silang mauwing pera.

SJEA: Talagang ubos sa pagbayad. That explains also why in the Philippines, one of the lowest saving rates in Asia.

WEBB: Really.

SJEA: Yes, that's why if you look at the banks, yung bank products natin are not very sophisticated. Availment of credit cards, it's very low.

WEBB: That's true. What happens to those who earn the most? Are their tax rates going to increase, because dapat sabi mo progressive 'di ba?

SJEA: No, it's going to increase relative to the rest of the population. But as a whole, everyone's tax will go down.

WEBB: Pati sila?

SJEA: That's the good thing about this bill.

WEBB: Okay, so, there's no one, I don't think there's a Filipino who wouldn't want this bill.

SJEA: Except for the ones working... except for the ones collecting. And I appreciate their concern. Trabaho talaga nila yun.

WEBB: So far, have you had talks with, discuss this, this research, this bill with the BIR and the DOF?

SJEA: Outside of our first committee hearing, wala pa, but I'm liking what I'm hearing that they're open to it. Basta we pass other measures that will help the collection of BIR. Kailangan naman talagang balansehin yung collection ng BIR doon sa pangangailangan ng tao.

WEBB: Yeah, but when you talk about fiscal incentives and all that Senator, that's already put in place. We already have that.

SJEA: Yeah, but they want to tighten things up, like going forward para hindi na masyadong generous yung binibigay na incentives.

WEBB: Corporate income tax. How's that gonna affect corporate income?

SJEA: Well, I also have a separate bill for corporate income tax.

WEBB: Iba yun? Is it also going to lower corporate income tax?

SJEA: Yes. The idea is to lower it, because we talked about our rates compared to the rest of ASEAN. We're third to the highest. Sa corporate, we're the highest.

WEBB: Number 1 tayo?

SJEA: Number 1 tayo.

WEBB: So, what does that say about the Philippines? Sometimes, that's a little confusing that they obviously have more progressive countries than us, and yet we have the highest corporate tax?

SJEA: Well, long term siguro. It says that we have to become more competitive, if we want to stay in the game. Kung gusto natin na maging kasabayan natin yung mga ibang bansa, kailangan sumabay tayo dito sa tax rates, kailangan long term yung pananaw.

WEBB: You talked about the ASEAN integration and the ASEAN (inaudible), lahat ba sila nagbababa ng income tax pati corporate income tax?

SJEA: They are doing a lot. Aside from lowering the corporate income tax, they are also improving their incentives, they are also spending a lot on education, on science education, on building their universities. So, tax is just a small part of the whole thing picture of all what this countries are known.

WEBB: Yeah, because integration will start on 2017 and from now...

SJEA: 2015 I think.

WEBB: 2015, that's right...

SJEA:, andito na talaga.

WEBB: In terms of your colleagues in the senate. And let's talk about the House of the Representatives a little later on. Do you have allies, I mean, Senator Recto.

SJEA: Senator Recto and Senator Bam has Bills also to fix the income tax. I am pretty sure they are in this fight. But the others, I don't think naman, nakita naman nila ang suporta ng taumbayan, hindi naman siguro sila kokontra duon.

WEBB: But how different would your Bill be from Senator Recto, who was a chairman of ways and means...

SJEA: Well, Senator Recto and Senator Bam they adjust the brackets-the tax brackets. Kasi nga ang luma na nung brackets but its the same rates. But I will adjust both the rates and the brackets.

WEBB: Right, right. So tingin mo kampi na kayong tatlo dito. Or is there a need to consolidate the three Bills.

SJEA: Well, I think I am open to consolidation and to suggestions. So I think kampi kami rito.

WEBB: Do you think you will have the support of possibly the minority here.

SJEA: Hopefully, hopefully. We have to convince them but I think it's a popular measure, I think we will get there soon.

WEBB: What was the last time, you did say that 1997 was the last time rates adjusted. But is there has been a senator recent history that do this that would do this?

SJEA: Wala yata. But don't forget, I used to remember in recent reforms we had the Sin Tax in 2011. So, that gave us additional-that they reported to us the BIR. There is additional P65B to collect. Kung ang mawawala ay for first year 90 or 43, so sobra pa tayo, diba.

WEBB: But the revenue from the Sin Tax has already been allotted for other things, diba.

SJEA: Yes. It's the Philhealth, being part most of it.

WEBB: Okay, you must have been excited, but 2015 is there enough time because , you go on-break and when is this...

SJEA: We'll back in May, we are break in June and be back in July, mid- July.

WEBB: And you wanted somehow to push this as part of the President's state of the nation address.

SJEA: Well, I am hoping that by the time SONA comes around, we can have more or less the position on the executive branch, we have a position on this Bill. I know we are pushing it a bit pero bore in a three-year time meron on-the-clock dito. In three years we have to pass it in three years although my term is five years and I will be pushing it in the next five years.

WEBB: You also said that you are hoping by July if it is part of it light in year after to be passed it into law.

SJEA: Yes, a one year that is okay. Because in the committee we can get it out quickly, the base would take a consider both time. But first we have to give consideration that it must generate in the House. So here in Senate but, actually passed it kapag hindi pa nila napapasa sa Kamara.

WEBB: So, there you go, that is the next question your counterpart in the House of the Representatives. Who is it?

SJEA: It is Congressman Miro Quimbo, you know we worked together during the impeachment. There is some kind of rapport and teamwork there. I have raised that matter, so it's open. He wants more studies just like the BIR and the Malacañang, he also wants more studies lang.

WEBB: But he, what you are saying that he has not doing anything about it. He was not focus, he did not think about it until you open this about this...

SJEA: You know he is also open. What he wanted was to increase the exemption for the 13th month pay. So sabi ko, pwede natin gawin yun pero mas malaki ay maapektuhan yung actual income tax...

WEBB: ...yung buwan buwan.

SJEA: Kasi hindi naman lahat nakakakuha ng bonus over P20, 000.00, yung mas malaki na maraming maapektuhan. Yung actual income tax.

WEBB: Talaga? Yung buwan-buwan?

SJEA: Kasi hindi naman lahat nakakakuha ng bonus over P20,000.00.

WEBB: Yung 13th month na yun, bonus niyo lang yun dito sa bill na 'to?

SJEA: (Laughs) So bonus dun sa bill.

WEBB: Is it possible na... did you pass this bill already with Congressman Quimbo?

SJEA: Not yet. I think he's doing his own studies. He's quite comprehensive on this approach.

WEBB: So he's a tax guy?

SJEA: Yes, yes. He's a lawyer and he has some experience with tax and he knows a lot of economists who can do a study on this.

WEBB: You too, tight? You're a lawyer as well.

SJEA: yes but I have to say I'm not a tax expert so medyo it took some time before I got to this area.

WEBB: Who do you feel would oppose such a bill? I mean which agency? Aside from BIR and the DOF, are there other groups?

SJEA: Wala siguro kasi apektado din sila nito.(Laughs)

WEBB: Everyone will be affected.

SJEA: Everyone will be happy with more money on their pockets to spend for their family.

WEBB: But I guess the question really is the executive branch. I mean...

SJEA: Yes. If the executive certifies a bill and they give their support, that's like ano parang nasa express lane ka na siguro sa supermarket.

WEBB: For sure. Well, let's talk about the FOI. The FOI was not a priority bill for the president and yet you have Senator Grace Poe's committee already passing this, I mean the Senate passed this already.

SJEA: Because it's been pending for... if you look at its legislative history Pinky, almost a decade and a half na siya.

WEBB: That's true. But I also looked back at the campaign of P-Noy saying he wanted this passed yet he did not certified this as urgent. What is you're feeling about this? Do you think he will be happy? I mean who's president who would say this as part of their State of the Nation Address? Pagdating ng 2017, bababa na ang ano... Napakalaki ng babayaran niyong mga buwis... Di ba? Sino ang may ayaw ng ganun? Kaya lang siyempre it will affect the kind of funds that will be generated by the government.

SJEA: That's right. I think the government in this case they will be conservative in their approach. They won't support until they are absolutely sure na talagang yung mawawala sa kania ay hindi ganun kalaki.

WEBB: P43 billion ano? They were saying the first month was what?

SJEA: The first year was P1.9 or P1.8 billion.

WEBB: Let's put it in P2 billion, and then the second year?

SJEA: P19 billion.

WEBB: Tapos umakyat na?

SJEA: P43 billion. But that was just preliminary figures, Pinky. They will still get back to us on their exact computation.

WEBB: Because they were basing it on annual incomes in the past, I think. That's what the BIR...

SJEA: But they also abstracted already pag na-implement yung nasa bill natin kung magkano yung mawawala sa kanila.

WEBB: But it just concerns me if that is the jump, does it means that every year, it's gonna double from 2 to 18, from 18 to 43?

SJEA: No, hindi na ksi wala nang... by 2017, on the third year of the bill, status quo na.

WEBB: Neutralized na siya.

SJEA: Yes.

WEBB: Well alright, good luck on this bill.

SJEA: Thank you.

WEBB: Senator, I like it. (Laughs)

WEBB: Of course we all like it but very quickly, I need your thoughts on number one, the committee hearing on the pork barrel scam. Some senators are saying it's time to put it to rest. Tigil na 'to. What is your take on this with the new developments?

SJEA: it is difficult to know when to put a stop with all these witnesses keep coming out. So I think the senators have to talk among themselves to get what the consensus is. I've heard Chairman Guingona see that he's like to personally wrap it up but what he can do with all these new developments? He might be accused of covering something if he doesn't hear.

WEBB: But your particular assessment on this so far? I mean after all the witnesses that come out?

SJEA: Well I think in terms of institutional safeguards, these are, after all, inquiries in aid of legislation. I think there are certain mechanisms we can put in place like for the agencies and limiting the use of funds, and I think we have to examine also all of these government corporations where money is flowing. Parang under the radar sila Pinky e.

WEBB: Kala ko under the table. (Laughs)

SJEA: Well of course, under the radar and under the table.

WEBB: Okay, so it's time to look at it.

SJEA: It's time to examine the framework, oo.

WEBB: And then, you've been a senator for a year...

SJEA: Almost a year.

WEBB: Okay, almost a year. It's almost your one year anniversary. You don't have any pork, it's not something as your father experienced in the past that you know, pork was coming in, meron ding tinutulungan for education. I remember in your campaign, it was about education.

SJEA: That's right.

WEBB: You had a very good commercial on this. How did you intend to do this right now without any Pork Barrel?

SJEA: You just have to be more creative and do it with the national budget with government agencies. We have to present it to our colleagues because dati, kahit desisyon mo lang e, you can implement the budget. Ngayon, we have to present it to our colleagues.

WEBB: Again, congratulations on this bill. I'm sure a lot of people will be enjoying the perks of this bill, if it does pass Congress and I hope it passes ASAP.

SJEA: Thank you Pinky.

WEBB: OKay, very quickly. Sorry senator, any reaction to your father, Senator Edgardo Angara? Of course, being linked likewise, to NABCOR.

SJEA: I'm concerned but I'm pretty confident that he can answer them, these charges against him. His name came out in the full report. The COA commissioner said just appearing in the COA report is not evidence of criminal involvement.

WEBB: True.

SJEA: He'll be able to answer it.

WEBB: But even the COA report in the past or it could be the same COA report, you father was also involved in this controversy because of questionable NGOs that... COA was saying he was involved or was actually a part of. I actually interviewed your father and hindi naman nya dineny that was a part of this particular company. As a matter of fact, there is a lot of suspected, very rich, powerful men who are a part of this particular company. That is something your father denies. The problem with that, he was saying in his defense, pupunta ang COA sa isang office namin na hindi na existing. Syempre, ang report nila ngayon, questionable na itong NGO na ito kasi ang address na pinuntahan namin, wala na ito. But your father's defense is tapos na e. Tapos na yung panunungkulan nya bilang senador at that time daw.

SJEA: That's right. I think that's one of the NGOs. He was one of the first to have a school-feeding program so he got very respectable people. He was able to raise funds for the program. I'm confident he can answer them, these issues.

WEBB: No matter if it comes up over and over and over again?

SJEA: I'm sure.

WEBB: And you know, he's always open to interviews as well.

SJEA: You know the thing is, he's abroad right now. I think they were trying to reach him.

WEBB: Okay, when will he be back?

SJEA: 2 weeks or something like that. I'm not sure. He's not hiding.

WEBB: I don't think he's the type who would hide. He's always been very open, actually. Senator, would you consider this your first major bill?

SJEA: Well, ngayon pa lang, bills on education actually. So, in the realm of tax muna, this could be the first.

WEBB: Just on education, would would you say is the most important product you're favoring in?

SJEA: It's a bit on scholarships. I think it's more urgent now, given na wala na yung PDAF. I think government is looking at how to manage scholarships. Kasi in the past, ang natatarget lang, college scholars lang.

WEBB: How do you ensure that now?

SJEA: The government has to invest more in the research.

WEBB: I guess available databases from the DSWD...

SJEA: That's valid. The families would receive CCT or use the first tranche of CCT.

WEBB: Alright. Senator Sonny Angara, we wish you luck on the bill. Keep us posted for any developments on that.

SJEA: I'm sure there'll be a lot more.

WEBB: Thank you Senator.

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