On Taxes: Do Filipinos really pay the highest taxes among ASEAN countries?’

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Congress is moving to lower income tax rates for Filipinos, with impetus from a report by the Tax Management Association of the Philippines (TMAP) asserting that Filipinos pay the highest income tax rates in Southeast Asia. Let’s investigate this claim and determine whether the argument holds water.

TJ Palanca https://www.twitter.com/tjpalanca
08-24-2014
LABORIOUS LEVIES - This ad in a newspaper cites the claim of the Tax Management Association of the Philippines, taken from the Instagram account of Senator Sonny Angara, one of the main advocates for reducing income tax rates.

Figure 1: LABORIOUS LEVIES - This ad in a newspaper cites the claim of the Tax Management Association of the Philippines, taken from the Instagram account of Senator Sonny Angara, one of the main advocates for reducing income tax rates.

The Tax Management Association of the Philippines (TMAP) claims that Filipinos pay the highest tax rates among countries in the Association of Southeast Asian Nations (ASEAN). This is their basis for arguing in favor of lower income taxes and inflation-sensitive tax brackets.. While the debate on whether lower taxes can be an overall sound policy rages on, let’s focus on this particular claim and determine whether Filipinos really do pay the highest taxes in the region.

Gathering the data on tax brackets from tax laws and revenue issuances, as well as converting taxable income into the appropriate currency may appear straightforward, but there are three ways in which this assertion may be inaccurate:

Let’s investigate whether or not the results change when adjusting for these concerns.

What about other levels of taxable income?

TMAP’s claim focuses on tax rates on a taxable income of P500,000; let’s expand it and compute the effective tax rates for a broad spectrum of taxable incomes, from nil to P6 million. Moreover, let’s use PPP exchange rates to adjust for cost of living.