Tax relief of low income earners

Aiming to reduce the income tax for those with employee who has lower income raises a
crucial question: How does the reduction in income tax for lower-income employees contributes
to the economic growth. This debate brings to light the right balance between considering
individuals financial relief and the impact to our overall economy performance.
The House of Bill 5636: Tax Reform for Acceleration and Inclusion (TRAIN) which was
introduced by Rodrigo Duterte Administration was approved by the House of Representatives.
The bill is aimed at lessening the tax burden on individuals earning up to PHP 250,000, it
introduces new excise taxes on gas and diesel fuels, among other items (Department of Finance,
2017). It is true that this lowering tax to low income earners is beneficial but in increased excise
taxes on fuel is a disadvantage on reducing the income taxes to employees. In this article I will
discussed the benefit of lowering the income tax rate to the employee and the disadvantage
of increase in excise taxes on fuels and also the impact of these to the economy.
"With the said reduction in the annual income tax rates, individuals earning purely
compensation Income will have lower withholding tax deductions from their monthly salary,
thereby increasing their take-home pay," said BIR chief Romeo D. Lumagui, Jr. published by
CNN Philippines. Increasing employees take home pay will have immediate relief in their
monthly budgets, enable them to meet their daily needs. This will improve their financial well-
being and it will give them a motivation to give their services. According to Senator Sonny
Angara the increase fuel taxes is a major worry, especially for the marginalized sector. Senator
Angara and the Department of Social Welfare and Development (DSWD) stress that this may
disproportionately affect poorer communities, underscoring the potential hardships they could
face due to the proposed tax increases. If we increase the fuel tax it could lead to higher
transportation and goods costs and in turn, may contribute to a higher cost of living, affecting
individuals and families across various income levels. Lowering income tax rates benefits not
only to the employees but also the economy it could increase the spending of the consumers
which supports the growth of economy. On the flip side, increasing excise taxes on fuels, as
warned by experts like Senator Angara and the Department of Social Welfare and Development
(DSWD), could disproportionately burden the marginalized sector, potentially leading to
economic challenges.
Through my research my standpoint is that reducing the income tax rate especially to the
employees who have a low income is advantageous. It is burden to them to have a low income
and reducing their earnings with high taxes is not favorable for them. While recognizing the
positive steps taken to alleviate income tax, it is crucial to also consider the potential effects of
excise taxes. It will give you knowledge regarding the potential social and economic
consequences, with a focus on benefiting the marginalized sector and promote a balanced
taxation approach.