Govt urged to extend coverage of new tax relief law

MANILA, Philippines - Businessmen and economists have joined tax experts in pushing for the full-year implementation of a newly enacted tax relief law. In a joint statement released Tuesday, 14 organizations led by the Tax Management Association of the Philippines (TMAP) appealed to President Gloria Macapagal-Arroyo and the Finance department to reflect their call in a much-awaited revenue regulation. Officials from the Palace and the Finance department were not immediately available for comment. "More than two months after Republic Act 9504 was signed, workers have yet to feel the benefit of said law," the statement read. "The implementing regulations have not been issued by the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR); and more importantly, the current draft of the regulations seeks to implement the law in a manner that would effectively defer and even curtail the full enjoyment of the benefits accorded under the law." Joining the TMAP were the Action for Economic Reforms, American Chamber of Commerce of the Philippines, Business Processing Association of the Philippines, Employers Confederation of the Philippines, Financial Executives Institute of the Philippines, Management Association of the Philippines, Makati Business Club, Philippine Chamber of Commerce & Industry, Philippine Institute of Certified Public Accountants, Philippine Inter-island Shipping Association, Philippine Liner Shipping Association, People Management Association of the Philippines, and the Public Services Labor Independent Confederation. They said the tax exemption for minimum wage earners and the increase in personal and additional exemptions should be made available in full for 2008 "to uphold the rule of law and provide immediate relief to all workers in these economically trying times." RA 9504 took effect in July 6 after it was signed into law by Mrs. Arroyo. The BIR and the DoF have argued the law was not retroactive to January 1 this year and that only half the total amount for personal and additional deductions can be availed of in computing the income tax for calendar year 2008. The Finance department has said it would go back to Congress to consult. The law increased the personal exemption for individuals as follows: single, P50,000 from P20,000; head of family, P50,000 from P25,000; each married individual, P50,00 from P32,000; and each qualified dependent (not exceeding four), P25,000 from P8,000. Based on the draft guidelines, the reduced exemptions for this year are: single individual, P35,000; head of the family, P37,500; married, P41,000; and each qualified dependent, P16,500. The reduced tax exemptions are contrary to a 1992 Supreme Court ruling, the organizations said. Under the draft revenue regulation, minimum wage earners earning additional compensation in excess of the statutory tax-exempt amount of P30,000, such as performance incentives or similar bonuses and other taxable business income, will lose their tax-exempt privilege as minimum wage earners. The groups also complained against additional administrative requirements and procedures such as the submission of quarterly list of minimum wage earners that should be certified by the National Wages and Productivity Commission. — Ruby Anne M. Rubio, BusinessWorld