ROXAS CALLS ON DOF TO JUNK IRR OF MINIMUM WAGE TAX EXEMPTION LAW

Liberal President Senator Mar Roxas called on the Department of Finance to junk the implementing rules and regulations for the new law exempting minimum wage earners from income taxes, in view of the provision in the IRR allowing for only a half-year exemption, contrary to the law's intention.

Roxas said minimum wage earners will still be losing P1.63 billion, or almost P5,000 each, as a result of the half-year exemption. "Mga switik lang gagawa ng ganito. Umasa ang taong bayan na buong taon ay exempted na sila sa income tax, tapos ay biglang magbabayad pa rin pala sila," said Roxas, author of Republic Act No. 9504, exempting minimum wage earners from income tax, as well as increasing personal exemptions for other workers.

In a letter addressed to Finance Secretary Margarito Teves, Roxas stressed that Congress' intention was for a full-year exemption for minimum wage earners. The Department of Finance issued the implementing rules and regulations (IRR) for the new law, but these only provide for a half-year exemption for minimum wage earners, starting from July 6, the date of the law's effectivity.

He noted that each minimum wage earner stands to lose P4,898 in income taxes if only a half-year tax exemption is given. "Lagi na lang napapako ang mga pangako ng gobyerno sa taong bayan. Ang P5,000 na mawawala sa kanila ay simbulo ng pagiging bulag ng gobyerno sa kanilang kahirapan. Sasabihin ng taong bayan na kwarta na ay naging bato pa dahil inagaw ng gobyerno sa kanila," he said.

The exemption of minimum wage earners is seen to have a revenue impact of P3.16 billion for the whole 2008, which Roxas said could be put to much better use by workers if they are allowed to keep their hard-earned money. By implementing an exemption only from July 6 onwards, the government stands to collect P1.63 billion more from minimum wage earners, and a total of P5.71 billion more from other workers, or a total of P7.34 billion.

"Ang mawawala sa gobyerno gawa nitong exemption ay matitiis ng gobyerno, at kaya nila itong bawiin sa pag-ayos ng kanilang sistema ng pagkolekta. Pero para sa bawat manggagawa, malaking halaga na makabili ng dagdag na karne, isda o bigas, o kaya't bumili ng gamot o textbook para sa kanilang anak," Roxas said.

The Ilonggo senator has noted that the Supreme Court had ruled back in 1992 that a tax exemption law could apply even to the year prior to the law's effectivity, in the case Umali vs. Estanislao. Aside from this, the BIR issued Revenue Regulations 01-2006 over two years ago, which had stopped the collection of withholding tax from minimum wage earners since January 2006.