The chairman of the House Committee on Labor on Wednesday asked the Bureau of Internal Revenue (BIR) to reconsider its decision to tax the new provisional monthly allowance granted to military personnel and officers.
National Unity Party Rep. Karlo Alexei B. Nograles of Davao, in a statement, said the government would not lose much if the BIR were to waive the withholding tax on the provisional allowance granted by the Palace for military and uniformed personnel (MUP).
“It would go a long way to augment the meager salaries of our soldiers, most of whom are in the frontlines fighting not just the insurgents but also the depression that they have to go through being away from their families. This is a way of showing gratitude for the men and women who risk their lives every day to protect the country and its citizens,” he said.
According to Nograles, the provisional allowance granted by President Aquino is an interim measure to supplement the total compensation of MUP, pending the passage of the pension reform measures that would rationalize their base-pay schedule.
Earlier reports claimed the BIR was adamant on collecting the tax on military allowances granted by President Aquino through Executive Order [EO] 201.
Nograles said since the allowance is provisional in nature, the BIR, at its discretion, waive the tax on the provisional allowance granted to MUPs.
“This is a gray area because it is a provisional allowance and is nowhere within the list of remunerations that are specifically listed as either taxable or non-taxable under Republic Act [RA] 9040,” Nograles said.
Under RA 9040 or The AFP Tax Exemption for Pay and Allowances Act of 2001, MUPs are exempt from paying taxes on their longevity pay, the cost of living allowance, personnel economic relief allowance and hazardous allowance; collateral pay, namely, specialist pay, combat pay, flying pay, air mechanic’s pay, sea duty pay, hazardous duty pay, instructor’s duty pay, parachutist’s pay and hardship pay and collateral allowances, namely, special clothing allowance, cold winter’s clothing allowance and cold weather clothing maintenance allowance, winter clothing allowance, initial enlistment and reenlistment allowance and laundry allowance.
MUPs are also exempt from paying taxes on their retirement benefits, pensions, death and disability benefits. The EO also increased the hazard pay of uniformed personnel from P290 to P390 a month.
Nograles added the list as provided by RA 9040 “specified the items that are exempt from tax but did not specify the allowances subject to the usual tax. So I think that this provisional allowance can be tax exempted without any legal complication.”