PRESIDENT AQUINO REJECTS LOWER INCOME TAX RATES PROPOSAL?

MANILA - President Aquino has thumbed down proposals by his allies in the legislature to lower income tax rates, saying it may create an adverse affect on the country's economy.

The President fears that lowering income taxes may result to an inflated deficit since there will be reductions in the country's revenue.

A bigger deficit may in turn have a negative factor when credit rating agencies start to evaluate the country's economic performance.

He added that one suggested probable move to avert effects of lowering income taxes would be to increase the value added tax (VAT), which in turn will hit the income of all classes of society.

Aquino cited a possible increase in price of oil that may eventually affect cost of services and products.

So whether this move of lowering the income tax levels would be beneficial, the President is not so convinced. He said it could be reconsidered if there was a budget surplus, but given the current financial conditions, he said the country cannot afford to lower any taxes for that matter.

• The President said lowering income taxes may also go against the progressive taxation for which the constitution requires, which means those who have more should pay more, and those who have less should pay less, but the effects of lower income taxes maybe otherwise, and may hit the incomes of even the smallest income earners in the country.

Source: Agency