What are the government's tax reform plans?

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Metro Manila (CNN Philippines) — Filipino workers who make only ₱12,000 a month — like printing machine operator Jerry Mallarbe — pay the highest personal income taxes in Southeast Asia.

"Malaki kung sa malaki," Mallarbe told CNN Philippines Tuesday, referring to the tax deducted from his pay.

This high tax on low income earners is one of the problems that President Rodrigo Duterte promised to solve in his first State of the Nation Address. He said his government will reduce personal and corporate income taxes and install a simpler and more equitable income tax system that will attract more job-creating investments.

Mallarbe heaved a sigh of relief after hearing Duterte’s SONA promise.

"Okay iyon. Madadagdag iyon sa pang araw-araw (na gastos), sa pagkain, ganyan, sa gastos sa school ng mga bata," Mallarbe said.

[Translation: That’s okay. That can add to the money we spend daily for food, for things like that, school expenses for the children.]

The government collects 20% in taxes from workers earning ₱12,000 to ₱20,833 a month. Tax rates for this income group are lower in the country's Asian neighbors:

Indonesia: 15%

Malaysia and Thailand: 5%

Singapore: 0%

The Department of Finance (DoF) is working double time to finalize the new tax brackets, Spokesperson Paola Alvarez told CNN Philippines. Under the proposed scheme, those earning ₱25,000 or less a month will be exempted from personal income tax.

Alvarez said they are also planning to reduce the highest income tax of 32% to 25%. She declined to give details on the other tax brackets because they have not been finalized.

"A common household … [would] have to earn at least ₱25,000 to ₱27,000 to have a decent family life. So that's the bracket we would base on," she said.

The DoF aims to implement the new tax system by the first quarter of 2017 — but that target will depend on how quick Congress can pass the measure.

The proposed tax system is similar to suggestions made by tax experts such as the Tax Management Association of the Philippines. The proposed taxes will be based on annual income:

Not over ₱300,000: 0%

Over ₱300,000 – Not over ₱500,000: 10% in excess of ₱300,000

Over ₱500,000 – Not over P1 million: ₱20,000 fixed tax + 20% in excess of ₱500,000

Over ₱1 million – Not over ₱2.5 million: ₱120,000 fixed tax + 25% in excess of ₱1 million

Over ₱2.5 million: ₱495,000 fixed tax + 30% in excess of ₱2.5 million

Tax expert Benedict Tugonon, president of TMAP, suggested that the government should find other sources of revenue.

"The tax bracket[s] that we have are so outdated — they've been there since 1987 and this has not been adjusted," he added.

Will the DoF be raising taxes at all? Alvarez said they are looking at increasing taxes on luxury goods, cigarettes, junk food and the excise tax on oil products.