Thursday, August 21, 2008 So: Taxed, not relieved By Michelle P. So Caught in the Net
I FEEL for accountant Jonathan Capanas in his bemusement over the new tax exemption law.
I am as confused as he is and I barely understand the difference between an income tax and a withholding tax. What I do know is that a big chunk of my monthly pay goes to Pluto (the dog or the erstwhile planet, who cares).
The new law, Republic Act 9504, gives a tax relief to wage earners. RA 9504 was enacted into law on June 17 this year but has remained unimplemented because of the absence of guidelines. So for now, no one is relieved, more so accountants like Capanas.
Anyway, the spirit of RA 9504 is to unburden the wage earner of paying heavy taxes by expanding his tax exemption and therefore increasing his net pay. I try with some effort to understand RA 9504 but reading those “over but not over” under the heading “Rates of Tax on Taxable Income of Individual” exasperates me.
Capanas, dean of the law college of the University of San Jose Recoletos, is quoted by Sun.Star Cebu reporter Elias O. Baquero as saying that despite the good intention of the law, it creates wage distortions and leaves employees or workers grumbling or demoralized. Republic Act 9504, without its implementing guidelines, sidelines employees who earn a slight above the minimum wage.
The accountant illustrates: Under RA 9504, an employee earning P10,000 a month gets a bigger take-home pay than a co-employee who earns P10,100 a month because the first employee is entitled to the new exemption but the second employee is not.
This being the case, an employee would rather go for a lower salary but a bigger take-home pay than a higher salary but a smaller take-home pay.
This seems like a practical thing to do but it hardly benefits the employee when bonus time comes. Since a bonus is usually pegged on the monthly salary, a smaller salary means a smaller bonus as well. The mandatory 13th month pay is a case in point.
RA 9504 leaves the human resources department discombobulated on how to address adjustments in salaries. (I rarely use discombobulated to mean confused but I am miffed at those provisions on “over but not over” as well as the air-gasping 243-word single-paragraph section on Optional Standard Deduction.)
RA 9504, or the Tax Relief for Minimum Wage Earners Act, likewise gives company accountants with more work to do, making them fussier than they already are, to the haplessness of employees who do not work in the accounting department.
Capanas, whose credentials as an accountant and a lawyer make him lethally fussy, points this out, the additional work for the accountants (not the ordinary employee’s haplessness). Under RA 9504, the company accountant has to check and monitor every employee’s compliance with the submission of the income tax return. Capanas likens this work to “acting like the extension of the BIR examiner.”
I know what he means. Any minute now, I will get a local call from Sun.Star Cebu chief accountant Luz Cuyos complaining about this impending extra work of her department at no extra pay. Haha. Go, discombobulate, Luz!
In life, there is only certainty. Reading tax laws and codes can kill a non-accountant.
