[Ask the Tax Whiz] PROGRESS or GINHAWA: Which reform can truly increase take-home pay?

The policy direction is clear: the Filipino middle class needs meaningful and lasting tax relief. When the Tax Reform for Acceleration and Inclusion law (TRAIN) took effect in 2018, the first ₱250,000 of taxable income became tax-free. That threshold has remained unchanged despite years of higher food, housing, transportation, healthcare, and education costs. This creates bracket creep: salaries rise on paper, but workers may pay more tax without becoming better off in real terms. The administration’s PROGRESS Bill—Promoting Growth, Revenue, and Equity Towards Socio-Economic Sustainability—and Senate President Win Gatchalian’s GINHAWA Bill—Granting Increase in Take-Home Pay for All Working Filipinos—address the same problem through different policy designs. The real question is not which bill wins. It is whether Congress can combine tax relief, fiscal responsibility, and institutional reform. In this week’s Ask the Tax Whiz, we compare both proposals and examine how they can support a credible roadmap toward ₱1 million in tax-free income for every Filipino. 1. What is the main difference between PROGRESS and GINHAWA? Both bills seek to increase take-home pay, but they differ in scope and fiscal design. The administration’s PROGRESS Bill would raise the annual tax-free threshold from ₱250,000 to ₱350,000, equivalent to about ₱29,167 in monthly taxable income. Government estimates that fully-exempt workers would increase from 5.1 million to 6.3 million, adding around 1.2 million beneficiaries. Those earning between ₱250,000 and ₱350,000 could save up to ₱15,000 annually. PROGRESS would also remove the minimum corporate income tax for qualified micro and small enterprises, benefiting more than 78,000 businesses. The GINHAWA Bill offers broader worker-centered relief. It proposes a higher ₱400,000 tax-free threshold, or around ₱33,333 monthly, raises the tax-free ceiling for 13th-month pay and other benefits from ₱90,000 to ₱150,000, and exempts overtime, holiday, night-shift differential, hazard pay, service charges, and tips. It also proposes additional deductions and simpler compliance measures for micro and small taxpayers. The key difference is fiscal strategy. PROGRESS projects ₱326.92 billion in tax relief from 2027 to 2030, offset by ₱518.71 billion in new revenues, for an estimated net gain of ₱191.77 billion. The Department of Finance proposes recovering the cost through expanded sin and wealth taxes, possible taxes on plastic products, and an updated motor vehicle road user tax. In policy terms, PROGRESS emphasizes revenue balance, while GINHAWA provides deeper and more immediate relief based on how Filipinos actually earn their income. The strongest reform would combine both approaches—PROGRESS’ fiscal discipline and support for small businesses with GINHAWA’s stronger worker protections—then automatically index tax thresholds to inflation so the value of relief does not erode over time. 2. How can government recover the revenue loss without passing it back to consumers? PROGRESS proposes recovering much of the cost of tax relief through higher excise taxes on sweetened beverages, tobacco, vapor products, plastics, and other goods. These taxes may serve valid health and environmental goals, but they should not become the main permanent funding source for lower income taxes. If health taxes work as intended, consumption—and eventually the taxable base—should decline. Higher rates may also push consumers toward cheaper illicit products when customs enforcement, licensing, product tracking, and border controls remain weak. Tax relief should not simply be taken back through higher retail prices. A more sustainable sequence is needed. First, lift or substantially relax bank secrecy for legitimate tax investigations, with clear legal limits, due process, confidentiality safeguards, and independent oversight. Second, launch a nationwide, risk-based audit and investigation of unexplained wealth. Tax returns should be lawfully matched with bank information, property records, beneficial ownership, procurement payments, campaign-finance disclosures, and other third-party data. No one should be presumed guilty because of political affiliation, family name, campaign participation, or government contracts. But public officials, political families, major donors, and contractors should not be exempt from scrutiny when objective records reveal significant gaps between declared income and accumulated assets. Government should also strengthen electronic invoicing, digital tax stamps, customs intelligence, inter-agency data sharing, and AI-assisted risk assessment to detect tax evasion, smuggling, and illicit trade. The policy principle is simple: recover unpaid taxes and unexplained wealth before asking consumers to pay more. 3. Is ₱350,000 all government can give the overtaxed and underserved middle class? It should be the beginning—not the ceiling—of reform. Tax relief is not a government favor that workers must immediately repay through higher prices or new consumption taxes. Middle-class families already contribute heavily to public revenues while often paying privately for healthcare, education, transportation, housing, security, and other services that taxes are supposed to support. This column proposes a legislated and fiscally responsible roadmap: raise the tax-free threshold to at least ₱400,000 in 2026, increase it to ₱800,000 in 2027, and move toward ₱1 million in 2028. The threshold and tax brackets should then be automatically indexed to inflation. Without indexation, rising prices and nominal salary adjustments will continue to push workers into higher tax burdens even when their real purchasing power has barely improved. Each increase should be tied to measurable institutional reforms: full modernization of the Bureau of Internal Revenue (BIR) and Bureau of Customs, wider electronic invoicing, AI-assisted risk assessment, stronger inter-agency data sharing, reduced smuggling and customs leakages, and tougher enforcement against tax evasion and unexplained wealth. The Philippines should also immediately adopt a qualified domestic minimum top-up tax under the OECD Global Minimum Tax. This would allow the country to collect the top-up tax on low-taxed profits generated by large multinational enterprises operating here, rather than allowing another jurisdiction to collect it. Tax reform must also extend beyond salaried workers. Freelancers, professionals, online sellers, content creators, and small businesses need a simpler tax regime that lowers compliance costs, encourages voluntary registration, and expands the formal tax base. The strongest outcome is therefore not simply PROGRESS versus GINHAWA. It is PROGRESS plus GINHAWA—and accountability: the fiscal discipline of the administration’s proposal, the stronger worker protections of GINHAWA, automatic inflation indexation, simpler taxation for small businesses, modern revenue administration, and a credible roadmap toward ₱1 million in tax-free income. The final policy question is not only whether government can afford to give taxpayers greater relief. It is whether government is prepared to stop losing so much to inefficiency, smuggling, tax evasion, and corruption—and start collecting more fairly, efficiently, and honestly before asking compliant taxpayers to sacrifice again. – Rappler.com Mon Abrea, CPA, MBA, MPA (Harvard) is a global tax policy expert and Chief Tax Advisor of Asian Consulting Group (ACGlobal). He advises governments, multinational enterprises, and international organizations on tax policy, investment competitiveness, and fiscal reform. He is the author of Reimagining the World Without Corruption and Why Invest in the Philippines? CREATE MORE Edition, and has represented the Philippines in policy dialogues at the OECD, World Bank, and other international forums.