Govt bars tax collection from minimum wage earners

MANILA, Philippines - The Philippine government’s largest revenue source has been prevented from collecting taxes on minimum wage earners since two years ago. Amounting to an estimated P500 million, the tax obligations should have been allotted by employers for the Bureau of Internal Revenue (BIR) but an Executive Order has prevented the agency from collecting the same. The order temporarily disallowed the monthly practice of withholding tax obligations of workers earning P382 a day in Metro Manila, agency officials said during a Tuesday public hearing. During the public hearing—organized to formulate rules for a new law exempting workers from income tax—BIR deputy commissioner Nelson Aspe said that uncollected withheld taxes reach some P200 million a year. The bureau would rather focus its efforts on collecting back taxes from larger taxpayers which are expected to be higher, Aspe told reporters. The official clarified that the order didn’t exempt anyone from paying taxes. Republic Act 9504, which allows minimum wage earners to enjoy income tax exemptions, is set for implementation beginning July 5, following its publication in newspapers as required by law. Nevertheless, Aspe said that the agency will resolve issues after he was informed that a Metro Manila-based worker earning P382 a day was tax-exempt but a worker in Region Four receiving P350 a day failed to enjoy the same privilege. Although the new law would forego revenues of up to P14.25 billion, the exemptions were expected to boost consumption, hiking value-added taxes collected from such activities. “That is why the new law is revenue-neutral," Aspe said. - GMANews.TV