24/07/2025
NEWS ANALYSIS | On enforcing class-blind tax rates
In an attempt to equalize tax rates among all social classes, the Capital Markets Efficiency Promotion Act (CMEPA) was passed into law.
With Albay 2nd District Representative Joey Salceda as the principal author, CMEPA, or Republic Act (RA) No. 12214, aims to impose reforms in balancing trade and industry, including the taxation system for passive incomes, such as bank savings.
The Department of Finance (DOF) clarified it is the savings’ interest being taxed at 20 percent which is an already existing tax imposition, now standardized under CMEPA—contrary to numerous fake news about taxing the total savings amount.
Prior to this, the Tax Reform Act, or RA 8424, implements interest tax based on maturity periods, or depended on how long the money was held: specifically five to 20 percent interest for deposits for years ranging from below three to five years and tax-exempt interest, or zero percent for those more than five years.
DOF said this reform is an “outdated” system that was only favoring the rich who are only capable of long-term deposits, along with accountant-lawyer Benedicta Du-Balabad calling this “anti-poor” as it puts the small earners and depositors at a disadvantage.
However, Sonny Africa, executive director of IBON Foundation, a non-profit economic organization, argued standardizing income tax to 20 percent is not equalizing in nature since this will be regressive, as lower-income brackets will be paying the same amount of tax as those who have higher incomes.
Aside from this, CMEPA encourages the public to participate in the capital markets, such as investing in stock tradings, securities, and share issuance as the said law lowers certain taxes including Stock Transaction Tax (STT) and Documentary Stamp Taxes (DST) but Africa asserted this only benefits big-time investors and puts ordinary Filipinos at risk.
Instead of urging people who lack financial literacy to invest in alternatives, like stocks and bonds, he claimed the government should focus on providing decent wages and ensuring financial security.
// report by Rosette Gwyneth Banton
// layout by Ashley Jean Soberon