Republic of the Philippines

BOHOL ISLAND STATE UNIVERSITY

Main Campus
CPG North Avenue, Tagbilaran, City

Vision: A premier S&T University for the formation of a world class and virtuous human resource for sustainable
development in Bohol and the country.
Mission: BISU is committed to provide quality higher education in the arts and sciences, as well as in the
professional and technological fields, undertake research and development, extension service for the sustainable
development of Bohol and the country.

INDEPENDENT STUDY ACTIVITY

UNDERSTANDING THE PHILIPPINE TAXATION AND ITS EVOLUTION

Instruction:
1. Everyone should read and study the notes provided regarding the topic
2. This activity shall be done by pair
3. A topic for debate is given for each pair to discuss and share with
4. In a pair, one shall be assigned to agree/affirm with the statement and the other one shall oppose
the statement
5. Transcript of sharing shall be encoded through this template

Topic for think-pair-share:

Whether or not it would be beneficial to eliminate income/withholding tax and increase VAT/Excise Tax
on Basic Goods/Services and Luxury/Wealth Tax (diamonds, luxury items (designer bags/clothes, luxury
vehicles etc.)

Affirmative: Eliminate Income/Withholding Tax and Increase VAT/Excise Tax of Basic Goods/Services
and Luxury/Wealth Tax

Name of Speaker: Azika Magsayo

There are several different goals for taxation for they are primarily used by governments as a source of
income to finance infrastructure and public services including healthcare, education, transportation, and
military defenses as future protection in our country. In addition, taxes are used as a vehicle for wealth
redistribution, advancing social fairness by diverting funds from the wealthy to the underprivileged. I
supposed that eliminating income tax can potentially stimulate economic growth by providing individuals
and businesses with more disposable income. This increased spending power can lead to higher
consumption, investment, and entrepreneurship, which can contribute to economic expansion and job
creation. I also believe that eliminating income tax can simplify the tax system, reducing compliance
costs and administrative burdens for individuals and businesses which can lead to increased efficiency
and productivity in the economy. Furthermore, the removal of income tax can potentially encourage
individuals to increase their labor supply, leading to higher productivity and that they could spend more
on themselves as rewards for their undeniable hardships. For the sake of our workers and
entrepreneurs, then I stand to eliminate this type of tax. Tax rate cuts may encourage individuals to work,
save, and invest but also needs to be financed in another means to avoid budget deficit (Gale,2014). So
by increasing excise tax, this can be used as an alternative revenue sources to finance immediate
 Republic of the Philippines
BOHOL ISLAND STATE UNIVERSITY
Main Campus
CPG North Avenue, Tagbilaran, City

Vision: A premier S&T University for the formation of a world class and virtuous human resource for sustainable
development in Bohol and the country.
Mission: BISU is committed to provide quality higher education in the arts and sciences, as well as in the
professional and technological fields, undertake research and development, extension service for the sustainable
development of Bohol and the country.

spending cuts. I also believe that these luxuries are just for own benefits such as self validation,
sometimes used in clout chasing, and thereby only for people who has the ability to spend more on
themselves as means of self satisfaction. Looking on the bigger picture, since these excise taxes also
came from alcohols and cigarettes which is blatantly exposed especially to our young people then
increasing its tax can be used to discourage these unhealthy behaviors. Therefore I conclude that it will
be much better to eliminate income tax and increase excise tax for a higher quality of living.

Opposition: Increase Income/Withholding Tax and Eliminate VAT/Excise Tax of Basic Goods/Services
and Luxury/Wealth Tax

Name of Speaker: Zeah Marie Gultiano

For me raising income tax rates, the government can collect more revenue from those with higher
incomes, leading to a fairer distribution of the tax burden. High-income individuals have more disposable
income and can afford to contribute more to public services and social programs. Adjusting income tax
rates progressively ensures that those who can afford to pay more do so, contributing to the
redistribution of wealth and promoting social equality. VAT and excise taxes tend to have a regressive
impact, disproportionately affecting low-income earners who spend a higher proportion of their income on
basic necessities like food, shelter, and healthcare. By eliminating these taxes on essential items, the
government can alleviate financial pressure on vulnerable populations, ensuring that they can afford the
basic goods and services necessary for a decent standard of living. This can also help reduce poverty
and improve overall social welfare. Eliminating Luxury and wealth taxes, while intended to target the
wealthy, can often be difficult to administer and may not generate significant revenue. Moreover, they
can disincentivize investment and entrepreneurship, potentially hindering economic growth. By
abolishing these taxes, the government can create a more favorable environment for wealth creation and
job growth, encouraging innovation and productivity. Also, taxing wealth based on income rather than
assets ensures that taxes are levied fairly, without penalizing success or discouraging wealth
accumulation. It aligns with the principles of social justice and economic empowerment by ensuring that
the tax system is progressive, efficient, and equitable. It targets tax responsibilities more efficiently,
ensuring that those who can afford to contribute more do so while relieving the tax burden on lower-
income individuals. By fostering a fairer and more inclusive economy, this seeks to create opportunities
for all members of society to thrive and succeed.

Ultimately, this tax reform package aims to create a more balanced and sustainable economy that
benefits everyone, regardless of income level or socioeconomic status. It prioritizes fairness, efficiency,
 Republic of the Philippines
BOHOL ISLAND STATE UNIVERSITY
Main Campus
CPG North Avenue, Tagbilaran, City

Vision: A premier S&T University for the formation of a world class and virtuous human resource for sustainable
development in Bohol and the country.
Mission: BISU is committed to provide quality higher education in the arts and sciences, as well as in the
professional and technological fields, undertake research and development, extension service for the sustainable
development of Bohol and the country.

and social welfare, laying the foundation for long-term economic growth and prosperity.

Multiple Choice Assessment

Choose the letter of the best answer and provide explanation using your own words as to why that is the
correct answer.

C 1. Under the TRAIN Law, certain individuals are exempt from paying income tax on their annual taxable
income. Which of the following statements correctly identifies a group that is exempt from income tax under
the TRAIN Law?

a. Individuals with at least four dependent children, earning minimum wage

b. Senior citizens with a monthly pension of less than PHP 20,000
c. Individuals earning a gross annual income of more that PHP 200,000 but not over than PHP
250,000
d. Overseas Filipino workers (OFWs) with a minimum of six months' work contract abroad and
receiving minimum wage

Explanation: Under the Train Law in the Philippines, taxpayers earning below ₱250,000 per year are
exempted from paying personal income tax. This means that if an individual's gross annual income does
not exceed ₱250,000, they are not required to pay income tax.
Individuals earning a gross annual income of more than PHP 200,000 but not over than PHP 250,000 are
exempt from income tax under the TRAIN Law. This is because their income falls within the range that is
exempted from tax under this law.This provision was put in place to alleviate the tax burden on low income
earners and to ensure a fair and equitable distribution of the tax burden.

B 2. Joseph, single, earned a net taxable annual income of Php 684,373 in 2023. What is Joseph's income
tax liability for the year 2023 under the TRAIN Law?

a. PHP 56, 874.40

b. PHP 79, 374.60
c. PHP 136, 874.60
d. PHP 159, 347.40

Computation: Step 1:
Since Joseph's taxable income falls between ₱400,000 and ₱800,000, the tax rate is 20%.

Step 2:
Calculate the tax amount by multiplying the tax rate by the excess of Joseph's income over 400,000.

•In this case, the excess is ₱284,373

 Republic of the Philippines
BOHOL ISLAND STATE UNIVERSITY
Main Campus
CPG North Avenue, Tagbilaran, City

Vision: A premier S&T University for the formation of a world class and virtuous human resource for sustainable
development in Bohol and the country.
Mission: BISU is committed to provide quality higher education in the arts and sciences, as well as in the
professional and technological fields, undertake research and development, extension service for the sustainable
development of Bohol and the country.

(Since 684, 373- 400,000 is equals to

284, 373)

Therefore: The tax amount is

₱56, 874.60
(Since 284, 373 x 0.20 is equals to
56, 874.60)
With this, the 20% of ₱284,373 is
₱56, 874.60.
₱56,874.60 +22,500= PHP 79, 374.6
Hence, Joseph’s income tax liability for the year 2023 under the TRAIN Law is PHP 79, 374.60
So, our answer is letter B.

B 3. The government of a developing nation has recently implemented a new tax on luxury goods in an
effort to raise additional revenue. The government has stated that the revenue generated from this tax will
be used to fund infrastructure projects, improve healthcare services, and provide assistance to low-income
families. Which of the following statements best describes the potential impact of this tax on the nation?
a. The tax is likely to reduce the consumption of luxury goods among the wealthy population, leading
to a decrease in tax revenue over time
b. The tax is expected to generate significant revenue, which can be used to fund important social
programs and improve the overall quality of life in the nation
c. The tax may result in increased smuggling of luxury goods, as consumers seek to avoid paying the
tax
d. The tax is likely to be unpopular among the wealthy population, leading to political unrest and
instability in the nation

Explanation: The implementation of a new tax on luxury goods in a developing nation is likely to have a
positive impact. This tax is expected to generate significant revenue, which can then be allocated to fund
important social programs such as infrastructure projects, healthcare services, and assistance for low-
income families. By leveraging the purchasing power of the wealthier population who can afford luxury
goods, the government can raise funds for crucial societal needs without burdening lower-income
individuals. Therefore, it’s best describes the potential impact of this tax on the nation, emphasizing its
potential to improve the overall quality of life through increased government revenue and investment in
essential services.

(This is a recycled question. Explain based on your understanding)

Name of Students
1. ZEAH MARIE GULTIANO
2. AZIKA MAGSAYO