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Sunday, January 08, 2006
Exec wants tax exemption plan legislated
By Victor L. Camion
NEGROS Oriental Board Member Melimore Saycon underscored the need for Congress to legislate the proposal to exempt minimum wage earners from paying their withholding tax.
Saycon pushed for the measure after President Gloria Macapagal-Arroyo ordered the Department of Finance to exempt minimum wage earners from paying withholding tax effective January 1.
He said the President's order might do away with the withholding of income taxes at source for minimum wage earners and improve their net take home pay.
But this did not mean an "outright exemption" from the income tax liability that would then be due in lump sum at yearend.
"Since minimum wage earners will be hard put to pay tax due at yearend without the usual monthly withholding, it would be best to pass a law to effect such an exemption from income tax of this sector," said Saycon.
He explained that enacting the law would be an exercise of Congress' power to grant tax exemptions with two-thirds vote.
"Perhaps an adjustment in allowable personal exemptions could do the job. Congress should pass a law as soon as possible to grant such income tax exemption to minimum wage earners," Saycon said.
The President before Christmas ordered Finance Secretary Margarito Teves to exempt from the collection of withholding tax workers in the private sector whose wages are equivalent to salary grades 1 to 3 of their counterparts in government, effective January 1, 2006 as part of the non-wage benefits of workers.
The Chief Executive also ordered Teves to draft a legislative proposal to restructure the income tax system to reduce the income tax burden of the low and middle-income groups, including minimum wage earners.
Arroyo also ordered the finance department to pursue a package of "income tax-related reforms and efficiency measures" to "broaden the income tax base and improve tax collection from self-employed individuals and professionals, among others."
(January 8, 2006 issue)
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