Senator Mark Villar urges economic managers to back higher tax exemption ceiling

MANILA, Philippines — Senator Mark A. Villar has called on the government’s economic managers to support his proposal raising the annual personal income tax exemption ceiling, arguing the move would provide immediate financial relief to workers and stimulate household spending amid an economic slowdown.

Speaking at the Senate Committee on Finance briefing on the proposed 2027 national budget, Villar stressed that tax relief must be considered as consumer confidence weakens and public expenditure lags.

Under Villar’s Senate Bill No. 2137, the annual income tax exemption ceiling would increase from ₱250,000 to ₱360,000. If enacted, workers earning up to ₱30,000 a month would no longer pay personal income tax.

“If government spending is low and consumption is weakening, raising the income tax exemption ceiling will offer direct, immediate relief to our low- and middle-income workers,” Villar said in Filipino. “Instead of waiting for government aid, money stays directly in their pockets for food, electricity, transportation, education, and other family needs.”

During the briefing, economic managers acknowledged that personal consumption has dampened, while public construction contracted by over 30 percent across two consecutive quarters. They cited elevated inflation, muted consumer confidence, and governance concerns as key drag factors on economic growth and investment.

Villar described the proposed tax threshold adjustment as a practical economic stimulus.

“This serves as a form of pump-priming. While it may affect revenue collections, the money left uncollected will flow back into the economy through higher household consumption,” Villar noted, emphasizing that the bill aims to complement—not replace—targeted cash subsidies for the poorest families, disaster victims, and informal workers outside the tax net.

Special Assistant to the President for Investment and Economic Affairs Frederick Go revealed that the administration is separately considering raising the exemption ceiling to ₱350,000—a measure estimated to yield roughly ₱60 billion in foregone revenue. However, Go pointed out that around 15 percent of that lost revenue could be recouped via taxes generated from increased consumer spending.

For his part, Socioeconomic Planning Secretary Arsenio Balisacan noted that personal income tax brackets were last significantly adjusted in 2018, meaning years of inflation have effectively heightened the tax burden on wage earners.

Villar framed his measure as a necessary inflationary adjustment that bypassed red tape.

“When the government collects taxes, it must redistribute those funds through programs. But if government spending is sluggish, it is more efficient to let workers keep their hard-earned money,” Villar said. “It goes straight to employees—no lengthy applications, distribution costs, or bureaucratic inefficiencies.”

Villar urged the Department of Finance and partner economic agencies to weigh the potential short-term revenue impact against the broader economic and social benefits of empowering millions of Filipino workers.

-Paraluman News