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Wednesday, June 18, 2008
Arroyo approves tax exemption for minimum wage earners
MANILA -- President Gloria Macapagal-Arroyo on Tuesday signed into law the bill exempting minimum wage earners from paying income tax and increasing the personal exemptions for other employees.
Arroyo signed Republic Act (RA) 9504 or "An Act Amending Sections 22, 24, 34, 35 and 79 of RA 8424, as amended, otherwise known as the National Internal Revenue Code of 1987," in simple rites in Malacañang.
Arroyo Watch: Sun.Star blog on President Arroyo
Senators Ramon "Bong" Revilla Jr., Juan Ponce Enrile, Francis Escudero, Richard Gordon, Manuel Roxas II, House Speaker Prospero Nograles and Representatives Exequiel Javier and Martin Romualdez were present during the signing.
The President said the new law is expected to help ease the impact of continuing rise in oil and food prices on the people, as it would "provide relief and additional money to spend for basic necessities especially for the minimum wage earners."
Under the new law, payments received by minimum wage earners for all holiday, night differential, hazard, and overtime should be exempted from taxes.
It also increases personal exemptions for individual taxpayers to P50,000 from 20,000 for single; from P25,000 for head of the family; from P32,000 for married; and from P8,000 for each qualified dependents of up to four.
The law also provides additional deduction for qualified dependents. For example, in the case of a family of six with two working spouses and four dependent children, they used to enjoy total exemptions of P96,000, but with the new law, the new amount of exemptions would be P200,000.
Finance Secretary Margarito Teves said minimum wage earners have been exempted from withholding tax since January 2006, through Revenue Regulations 01-2006, but with the signing of RA 9504, it now "formalized this tax exemption order for about 500,000 minimum wage earners both in the private and public sector."
Teves said the government stands to lose P3.16 billion annually in tax revenues with the income tax exemption of minimum wage earners and P11.09 billion with the new personal exemption levels.
He said the government, however, could recover these losses with the imposition of optional standard deductions (OSD) in filing business income tax returns that is expected to generate about P15.03 billion. (JMR/Sunnex)
For more Philippine news, visit Sun.Star Pangasinan. (June 18, 2008 issue)
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