Business, labor groups push rules on tax relief
Ma. Elisa P. Osorio
Philippine Star
Local and foreign businessmen are asking President Arroyo and the Department of Finance to change the planned implementation of the “Tax Relief Package” because the current strategy is expected to delay and even minimize benefits of the tax exemption for minimum wage earners (MWEs).
“We collectively appeal to the government, particularly the DOF and the Office of the President for the immediate revision of the draft implementing regulations,” the businessmen said in a statement.
According to them, over two months has passed since Mrs. Arroyo signed the bill into law last June but the people have not yet felt the benefits because the DOF is yet to complete the implementing rules and regulations (IRR).
Worse, they said the regulations proposed are not pro minimum wage earners.
“The current draft of the regulations seeks to implement RA 9504 (otherwise known as the Tax Relief Package Law) in a manner that would effectively defer and even curtail the full enjoyment of the benefits accorded under the law,” the joint statement of the Makati Business Club (MBC), the Financial Executives Institutes of the Philippines (FINEX), American Chamber of Commerce of the Philippines (AmCham) and Management Association of the Philippines (MAP) stated.
Other signatories were the Philippine Chamber of Commerce and Industry (PCCI), Tax Management Association of the Philippines (TMAP), Action for Economic Reforms (AER), Business Processing Association of the Philippines (BPAP) Employers Confederation of the Philippines (ECOP), Philippine Institute of Certified Public Accountants (PICPA), Philippine Inter-island Shipping Association (PISA), Philippine Liner Shipping Association (PLSA) People Management Association of the Philippines (PMAP)and Public Services Labor Independent Confederation (PSLINK).
“We strongly believe that the proposed implementing regulations negate the tax relief granted under RA 9504,” the statement said.
Businessmen urged the government to hold consultations with affected parties before finally signing an IRR.
This is because under the proposed IRR, MWEs that have additional compensation in excess of the tax exempt amount of P30,000 will lose their tax exemption privilege.
The additional compensation includes performance incentives and other similar bonuses.
The group said that this particular provision discourages productivity because workers will have to pay taxes if they receive bonuses that will push their income beyond P30,000.
Likewise, the businessmen said that the IRR imposes additional regulations and administrative procedures like the submission of quarterly alphalist of MWEs that is certified by the National Wages and Productivity Commission (NWPC) prior to BIR submission.
They said this is an administrative nightmare for both employers and employees. “It is unnecessary, unreasonable and contrary to the characteristics of a sound tax system.”
As such, they are asking the government not to change the definition of the MWE “in a manner that is contrary to law and counter-productive.”
Likewise they are appealing that the tax exemption of MWEs and the increase in personal and additional exemptions be made available in full for the year in order to provide immediate relief to all workers.
RA 9504 was signed into law on June 17. This exempts minimum wage earners from income tax and increases the tax exemptions allowable to individuals.
The social legislation was said to be the immediate response of the government to workers’ call for an increase in wages in the midst of rising food and fuel costs coupled with the double-digit inflation.
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