Wednesday, April 23, 2008 House raises tax exemption ceiling for minimum wage earners
THE House committee on ways and means on Tuesday approved a measure jacking up the ceiling of income tax exemption for minimum wage earners from the present P96,000 to P150,000 annually.
Antique Representative Exequiel Javier said the approval "in principle" of the consolidated bill would complement President Gloria Macapagal-Arroyo’s call for a new round of wage increase to cushion the soaring prices of rice and other basic commodities.
The proposed P150,000 tax exemption ceiling covers every family with at least six members.
To offset the estimated revenue loss of P7.95 billion from the exemption, the committee also included in the measure the proposal of the Department of Finance (DOF) for a simplified net income taxation scheme (Snits) for self-employed and professionals.
The Snits, which is expected to raise about P7 billion, grants self-employed individuals and professionals the choice to deduct 40 percent of their income to determine their taxable income.
”These are for self-employed individuals and for general partnerships, general professionals partnerships, because it is very hard to capture income from this sector, so we are giving them 40 percent deductions from gross income,” Javier said.
The congressman said that with the implementation of Snits, the government can even expect an additional revenue of P2 billion annually despite the higher ceiling for income tax exemption.
Lourdes Recente, a DOF director, said without the accompanying Snits, the government will suffer a great loss of revenue which could prompt the President to veto the bill.
“If we’re assured of getting the Snits passed together with the increase of personal exemptions of P150,000, our number showed that there would be a net revenue gain for government for as long as there is a Snits. The revenues will be coming from the Snits proposal,” she said.
Valenzuela Representative Magtanggol, chairman of the committee on labor, lauded the ways and means panel for heeding the worker’s call.
“This measure is long overdue. The minimum wage workers are the ones who bear the burden of paying this tax when is really the tax evaders who make us bleed,” he said.
At least 94,202 government and private workers who are occupying salary grade 5 and below would benefit from the enactment of the bill, which still excludes the uniformed personnel, Gunigundo said.
Employees who are under salary grade 5 and below categories are receiving between P7,457 and P9,209 a month in basic pay. (WV/Sunnex)
