The Finance Department said it is studying the implementation of a fixed taxation scheme which will be easier to implement than the current progressive tax system.
Finance Secretary Carlos Dominguez III, however, said implementing the fixed taxation scheme would require amending the 1987 Constitution.
A fixed tax is a lump sum tax that is not measured as a percentage of the tax base such as income, wealth or consumption.
“Our Constitution mandates a progressive tax system, which means to say pay in accordance to your ability to pay, basically on what you earn. I know fixed taxation, like in Hong Kong, is very effective,” Dominguez said.
“Now, we are going to have a constitutional change, so I will suggest that people really think about a provision that will allow something like this. It will certainly make life a lot easier for you, and a lot easier for the taxing authorities. [That] will most likely reduce the amount of corruption,” Dominguez said.
