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THE
Senate ways and means committee endorsed for plenary
approval on Tuesday its own version of the income-tax
reform bill granting automatic exemptions to
minimum-wage earners and providing relief to all
individual taxpayers by adjusting their personal and
additional exemptions to approximate the increase in
inflation since 1997.
In
reporting out the bill for floor deliberations, Sen.
Francis Escudero explained that the ways and means
committee’s version “aims to increase the take-home pay
of our workers to enable them to cope with the
increasing prices of commodities.”
For
instance, he noted, the Senate panel’s version differed
with the House-approved measure in exempting employees’
holiday, hazard and overtime pays, as well as nightshift
differential pay from income-tax coverage.
“These
items are included in the computation under House Bill
3971,” he said.
Escudero,
concurrent ways and means committee chairman, pointed
out that after the passage of the Comprehensive Tax
Reform Program, or CTRP, in 1997, the take-home pay of
workers had been drastically reduced by the spiraling
cost of fuel products, which spawned the increase in
prices of commodities, power and transportation.
“Despite
efforts to increase the level of the standard of living
of our people, only minimal adjustments were made on the
salaries of workers in the private and government
sectors, who are also burdened by the inflexible
individual income-tax rates and pegged amounts of
personal and additional exemptions in the CTRP,” said
Escudero.
He
estimated that out of 2.484 million compensation
income-tax filers in 2004, approximately 87 percent
comprised the minimum-wage earners.
According to Escudero, the Senate committee’s version
states that for married individuals, the husband and
wife shall compute separately their individual income
tax based on their respective total taxable income,
provided that if any income cannot be definitely
attributed to or identified as income exclusively earned
or realized by either of the spouses, the same shall be
divided equally between the spouses for the purpose of
determining their respective taxable income.
“The
committee rejected the Simplified Net Income Taxation
System carried by the House version,” he said, adding
that “the committee, however, provided a replacement
with the 40-percent Optional Standard Deduction [OSD]
not only for the self-employed and professionals but
also for corporations.”
Citing
finance department data, Escudero estimated that the
government stands to earn P780 million from the proposed
bill. The figure, he said, already deducted revenue
losses due to the exemption of minimum-wage earners and
the adjustment of personal exemption to P50,000 per
individual taxpayer and the P25,000 additional exemption
per dependent up to a maximum of four.
Revenue
loss from the tax relief for minimum-wage earners,
pegged at P3.16 billion, and the loss due to increase in
exemption, estimated at P11.09 billion, can be offset by
the revenues to be generated from the OSD valued at
15.03 billion, he said.
This
developed as Sen. Mar Roxas welcomed the expansion of
his original bill granting income-tax exemption to
minimum-wage earners to include the House proposal
increasing personal-tax exemptions and expanding the
coverage of the bill to cover government employees
covered by salary grades 1 to 5.
Roxas
lauded the “demonstration of bicameral cooperation” to
ensure the immediate passage of the bill seeking to
exempt minimum-wage earners from income taxes.
“We must
protect our workers and their families from the deluge
of high prices of food, oil and other needs. Now is the
best time to do this.”
Once
enacted, he said the proposed law would help stimulate
the economy by “allowing our workers to keep more money
in their pockets. It comes at a time when prices of
rice, food, and oil have gone through the roof. I look
forward to bicameral discussions with the House on this
bill. Clearly, we are on the same track in seeking ways
to help our workers cope with galloping prices,” Roxas
added.
He noted
that the substitute bill prepared by the Senate ways and
means Committee seeks to exempt all minimum-wage
earners—workers in the private sector receiving the
statutory minimum wage set by the wage boards—and
government employees classified under salary grades 1 to
five from income taxes. |
