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Tuesday, July 23, 2002
CABAERO: To condone or not
By Nini B. Cabaero
Among the bills sleeping in the House of Representatives are two seeking to condone penalties on companies delinquent in their social security contributions.
Both bills intend to address the failure of 75 percent of all companies in the country to remit to the Social Security System (SSS) the required contributions. As of end of year 2001, it was estimated that non-remitted SSS contributions and penalties due from delinquent employers have reached P4 billion.
The failure of these private sector employers to comply with requirements of the Social Security Law, as amended by the Social Security Act of 1997, deprives hundreds of thousands of workers of their right to avail themselves of SSS services.
Reps. Neptali Gonzales II and Harry Angping filed House Bills 4817 and 4818, respectively, to facilitate and hasten the collection of past due contributions from these delinquent employers.
At present, the law imposes a penalty interest of three percent per month or 36 percent per annum on non-remitted contributions.
Both bills seek to condone 100 percent of the penalties, if full remittance of delinquent contributions is made within 12 months.
For installment payments, both bills require five percent downpayment of the total delinquent contributions, with interest of 12 percent per annum.
House Bill 4817 allows up to 36 months, while House Bill 4818 allows only six months within which to pay in installment. If not paid as arranged, House Bill 4817 pegs a 12 percent penalty, while House Bill 4818 re-imposes the original 36 percent penalty.
This attempt to make it easier on delinquent employers can be described at best as humane because it recognizes the economic difficulties being faced by companies and at the same time it helps assure employees of access to social security services. There’s a point though that’s being overlooked.
The move to condone penalties works to reward the violators of the Social Security Law while their employees are disadvantaged by their inability to avail themselves of the benefits.
Condoning SSS penalties cannot be the solution to the problem of non-remittance. History showed it was not an effective option when in 1987 condonation was allowed by then President Aquino and again in 1997 by then President Ramos. Despite the decisions of the Aquino and Ramos administrations, the amount “lost” in the non-remittance of contributions continued to grow.
Social security fund administrators have enough bases to conclude that condoning penalties on violators cannot be an effective solution. It is possible that the 36 percent penalty interest is not the reason why companies are not remitting contributions. It is possible that 72 percent of companies today are delinquent because they used the contributions interest-free for their own purposes and they know from experience that the more un-remitted contributions there are, the more politicians would want to legislate condonation.
Let the full implementation of the existing law take over. The inability of fund administrators to put teeth to the law is fueling the non-remittance of contributions.
(Ms. Cabaero can be reached at e-mail address ninicab@sunstar.com.ph)
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