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A TAX
measure that virtually frees from any tax obligation all
wage earners annually grossing P150,000 and below was
approved Tuesday by the House committee on ways and
means.
During a
committee hearing on Tuesday, legislators agreed to
raise personal-tax exemptions from P96,000 to P150,000;
and those earning within the new tax exemptions would be
exempted from the 10-percent withholding tax-deductions
from their monthly paychecks.
This
good news was complemented by the support of foreign
businessmen in the country for President Arroyo’s call
for the grant of nonwage benefits to employees, saying
it is better than a wage hike that only further erodes
the competitiveness of the
Philippines
as an investment destination.
Henry
Schumacher, executive vice president of the European
Chamber of Commerce of the Philippines (ECCP), said they
will gladly heed the call of the President provided that
the nonwage relief is just a temporary measure.
Prior to
the approval of the tax exemption by the committee,
PDP-Laban Rep. Teodoro Locsin Jr. of Makati City said
the P150,000 personal income-tax exemption will be fair
to both taxpayers and the government, but asked the
finance department during the hearing, what will be its
effect if it is raised to P200,000.
Director
Lourdes Recente, finance director, replied that raising
the tax exemptions to P200,000 would mean a
P15.17-billion revenue loss for the government.
She said
the DOF would agree to a P150,000-tax exemption, which
would mean a P7.95-billion revenue loss for the
government, provided it is implemented in two phases
under their proposed Simplified Net Income Taxation
(SNIT).
Under
the SNIT, minimum-wage earners will be exempted from
paying taxes in Phase I, while Phase II will involve the
granting of higher personal exemptions to low- and
middle-income earners.
Recente
said that with SNIT, the government will only stand to
lose P2.3 billion in revenues.
Lakas
Rep. Exequiel Javier of Antique, committee chairman,
allayed DOF’s apprehension on the revenue loss for the
government. With the higher tax exemptions, he said wage
earners would have more money to spend, the more
indirect taxes for the government in the forms of
expanded value-added taxes imposed on all commodities
purchased, offsetting the revenue losses derived from
the tax exemptions in the process.
Recente
said that without the SNIT the DOF will oppose a higher
tax exemption for minimum-wage earners and would even
lobby for a presidential veto of the measure should it
reach Malacañang.
Committee members approved a motion for the drafting of
a consolidated measure containing the proposed SNIT and
higher tax exemptions after they agreed to the proposal
of the DOF.
Militant
group Bayan expressed support for the higher personal
exemption bills, but has some reservations on including
SNIT because it will limit the list of deductions that
professionals and self-employed tax payers can claim in
computing their income taxes.
The
Financial Institutes Executives of the Philippines (Finex)
also welcomed the proposed increase in personal
exemptions to P150,000, but if this is passed with SNIT,
it would like to know its features.
The
group feels that SNIT is anti-small business, as this
would limit the itemized deductions for some income
taxpayers. Some relevant expenses of professionals like
expenses for training, professional development, and
information technology will not be allowed as deductions
if SNIT is implemented, Finex said.
The
other members of the foreign trade group, meanwhile,
also spoke out in support of the President’s suggestion.
Chris Ward of the Australian-New Zealand Chamber of
Commerce said they are conscious of what their employees
are going through right now but if they give a wage
hike, they will also have to find out where they could
recoup it. One sure way, he said, is for them to
increase their prices, which would only diminish their
competitiveness.
“We will
help where we can, but we cannot just give an increase
if we can’t find something to cover that,” Ward said.
Rob
Sears of the American Chamber of Commerce said when it
comes to wage rates in the region, the
Philippines
is the least competitiveness right now, and giving
further hikes will make it worse.
Schumacher said “My concern is with the rice crisis, it
is a dangerous time to negotiate wages. We should wait
for it to go to the normal level, not when hoarding is
still taking place.”
He said
the call of President Arroyo for the grant of nonwage
benefits makes sense “to circumnavigate this perceived
or real rice crisis.” |
