DOF claims low-income workers to get bigger take-home pay

Low-income workers earning higher than the minimum wage are to benefit significantly from the Department of Finance's (DOF) proposed tax reform package by paying a lower income tax.

"Entry-level employees, such as office clerks who are most probably in their early 20’s and single with no dependents, earning a monthly salary of P13,378 would see an increase in their take-home pay by around P12,673 per year," Finance Undersecretary Karl Kendrick Chua said in a statement on Tuesday.

Their personal income tax would be reduced to zero under the proposed tax plan.

A call center agent earning P21,000 a month with four dependents, who may be paying P9,209 in income tax will only have to pay around P1,567 a year due to the proposed restructuring of the tax brackets. 

"This represents an 83 percent decrease in their tax due, which translates into annual savings of P7,642," Chua noted.

“The proposed income tax reform would also give an incentive to minimum wage earners, who are currently exempt from income tax, to aspire for a higher pay and improved work status without losing their tax privilege," he said.

Chua said that 4.7 million Filipinos earning P250,000 or less a year, representing 83 percent of the tax base of individual taxpayers, would be exempted from paying income taxes.

Some minimum wage earners do not want to move beyond the minimum wage for fear of losing their income tax exemption.

"But as you can see, even non-minimum wage earners in our proposal may become tax exempt,” Chua said.

He added that another half-million plus taxpayers earning between P250,000 and P400,000 will pay taxes equivalent to only 20 percent of their incomes in excess of P250,000, under the tax reform plan.

In September, the DOF submitted to the Congress its proposed Tax Reform for Acceleration and Inclusion Act last month in keeping with the Duterte administration’s 10-point socioeconomic agenda. — Ted Cordero/VDS, GMA News