Govt told to explain half-year implementation of tax relief law

MANILA, Philippines - The Supreme Court has ordered the government to comment on the allegations of Senator Manuel A. Roxas that it is not fully implementing a wider tax relief for minimum wage earners. "Acting on [Mr. Roxas’ petition], the court resolved, without giving due course to the said petition, to require the respondents to comment thereon within 10 days from notice hereof," the minute RR 10-2008 read. In a 24-page petition filed last month, the principal author of Republic Act 9504 said the government, through the Department of Finance and the Bureau of Internal Revenue, limited the scope and coverage of the law by commencing its application on a half-year basis and limited the definition of a minimum wage earner. Congress approved the law last June 17, exempting minimum wage earners from income tax. The government agencies thereafter issued Revenue Regulations (RR) No. 10-2008 as the law’s complementing guidelines, which Mr. Roxas is now seeking to nullify. "Instead of helping our workers, the issuance of the [RR 10-2008] necessarily curtailed the supposed complete enjoyment of the benefits they are legally and rightfully entitled, all to the detriment and prejudice of our minimum wage earners and their families, who are now on the verge of poverty," he said. Firstly, the tax benefits should be applied on a retroactive basis beginning January this year instead of July, as prescribed by RR 10-2008, Mr. Roxas argued. In the National Capital Region alone, the 500,000 minimum wage earners stand to save a total of P2.376 billion if the first six months were included in the computation. These savings could still boost the economy even if they do not pass through government coffers, Mr. Roxas said. "The same amount could be injected back to the country’s economy through consumer spending," he added. On an individual basis, this would translate to a P36 daily tax savings. A minimum wage earner could already buy 1.2 kilos of rice or even three cans of sardines on this amount, he added. "Undoubtedly, the foregoing computed tax savings is a vital added resource that will provide minimum wage earners and their families the added means to survive amid the soaring prices of basic commodities," he stressed. Moreover, Mr. Roxas added, the full-year implementation of this tax relief has legal basis, he added. The high court itself ruled earlier that Republic Act 7167, which increased the personal and additional tax exemptions of individual tax payers, can be made to apply to income earned on or after January 1991, even if the law itself took effect only a year after. In so declaring, the high court said the law is a "social legislation intended to alleviate in part the present economic plight of the lower income tax payers," Mr. Roxas added further. All the more should this apply to the present law considering the short hiatus between its enactment and implementation, he argued. At the same time, government agencies’ definition of a minimum wage earner violates the true intent of the law, he added. The law provides that a minimum wage earner refers to a worker in the private sector who is paid the statutory minimum wage. RR 10-2008, however, went on to limit their tax relief. It particularly stressed that "the minimum wage earner receiving other benefits exceeding the P30,000 limit shall be taxable on the excess benefits, as well as on his salaries, wages and allowances." "The real intent of [the law] is to absolutely grant the income tax exemption to minimum wage earners without any limitation and qualification," Mr. Roxas stressed. "In short, the income of minimum wage earners should not be taxed in any manner, regardless of whether or not they are receiving additional benefits and regardless of the amount or value of such benefits." The government agencies both exceeded their authority when they went beyond the parameters of the enabling law, he added. — I. P. Pedrasa, BusinessWorld