By Paolo Romero (The
Philippine Star) | Updated August 24, 2016 - 12:00am
MANILA, Philippines – The
Senate Ways and Means Committee will prioritize the estate tax reform proposal
of the Duterte administration by easing the “tax burden on a deceased’s assets
in order to lighten the grief of the heirs,” Sen. Juan Edgardo Angara said.
Angara said the estate
tax rates would be reduced and the tax-deductible expenses – such as medical
expenses incurred by the deceased – would be increased.
An estate tax is imposed
on the transfer of a decedent’s estate to his lawful heirs and beneficiaries
based on the fair market value of the net estate at the time of the decedent’s
death.
“The end result is that a
grieving family will be spared the further anguish of paying high estate taxes
which often delay the distribution of the assets to the heirs,” the senator
said.
“This tax hurdle, plus
unfamiliarity with estate taxes and cultural avoidance to discuss death-related
affairs, has led families to delay settling the estate, resulting in huge
penalties and surcharges while use of assets are not maximized,” he said.
Angara gave assurance the
committee would be adopting an “una ang pamilya (family first)” philosophy by
setting rules that are easy to comply with and adopt rates that are affordable.
Angara filed Senate Bill
980, which incorporates the estate tax reforms he is advocating.
Foremost of these is
adjusting the 1997-era estate rates to inflation which would result in doubling
the tax-exempt values.
The bill mandates a
resetting of rates every three years, with inflation as basis “so that it will
not take us 20 years to readjust the rates.”
In computing the estate
tax, Angara also proposed that the standard deduction be increased from P1
million to P2 million.
In addition, a family
home will not be taxed if it is valued at P2 million, double the present
threshold of P1 million.
Heirs can also charge to
the estate medical expenses of up to P1 million and funeral expenses of up to
P500,000, in recognition, “of the high cost of dying, he said.
The measure also allows
an authorized heir or estate administrator to withdraw P200,000 from the bank
deposits of the deceased.
“By lowering the
compliance hurdle for what is essentially an inheritance tax, tax clearances,
which are a requirement, for, let us say, a real property’s sale, will now be
expedited resulting in the asset’s commercial exploitation,” he said.
This will be good for the
heirs as they can now enjoy the assets, Angara said, adding that the government
is also expected to benefit because collections will increase.
Official records show
that only seven in every 100 deaths in the country settle estate taxes while
payment of the latter accounts for one-sixth of one percent of total Bureau of
Internal Revenue collections.
At present, a net estate,
amounting to P200,000, which is the lowest in the estate tax brackets, is
exempt from estate taxes.
The top-tier covers
estate with a value of P10 million and over which has a tax due of P1,215,000
plus 20 percent of the amount in excess of P10 million.
Meanwhile, Senate
Minority Leader Ralph Recto asked Malacañang to first issue implementing rules
and regulations (IRR) the new laws on persons with disabilities and balikbayan
boxes before pitching new taxes.
Recto was referring to
the IRRs for the law granting tax breaks and other benefits for persons with
disabilities (PWDs) and those of another law raising the tax-exempt value of
balikbayan boxes.
He said releasing the
long-delayed IRR of Republic Act 10754 would allow its provisions to be enjoyed
by millions of PWDs.
RA 10754 exempts PWDs
from all sales taxes on certain goods and services, like transport fares,
medicines, medical and dental services and laboratory fees, raising the total
discount to 32 percent.
It also grants a P25,000
annual income tax deduction to relatives within the fourth civil degree of
consanguinity or affinity, who are caring for and living with a PWD.
Although signed by then
President Benigno Aquino III last March 23 or almost five months ago, the law’s
implementation has been stymied by the lack of the implementing rules.
Recto said Malacañang
should order the IRR’s immediate release “before conspiracy theorists go to
town with the speculation that its release is being delayed to pave the way for
the reported delisting of PWD privileges” in the tax reform package it would
unveil soon.
Another law facing the
same predicament of “being effectively frozen by red tape” is RA 10863, the
Customs Modernization and Tariff Act, which raises the tax-exempt value of
balikbayan boxes and other personal belongings shipped home by overseas
Filipino workers (OFWs).
Signed by Aquino on May
30 this year, the law allows OFWs to send up to three P150,000 worth of tax-and
duty-free balikbayan boxes in a year, provided that the goods are not in
commercial quantities nor intended for barter of sale.
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