Philippine State Workers Cry Foul Over Tax Relief

MANILA, Philippines (Mindanao Examiner / August 31, 2008) - Filipino civil workers criticized the Arroyo administration for seeking to pass regulations for the implementation of the tax relief package that were allegedly flawed.

President Gloria Arroyo in June signed into law the Republic Act No. 9504, otherwise known as the “Tax Relief Package Law,” which exempts minimum wage earners in both the private and public sectors from paying income tax and increases personal and additional tax exemptions allowable to individuals.

However, three months after the law was adopted,its implementing regulations have yet to be finalized by the Bureau of Internal Revenue (BIR) and the Department of Finance (DoF). The Public Services Labor Independent Confederation (PSLINK), a national union representing more than 80,000 government employees, claimed that the present draft of the implementing regulations is laden with restrictive provisions that effectively prohibit many minimum wage earners who are supposed to benefit from the law from being covered by the income tax exemption.

“RA 9504 clearly states that workers who are receiving a compensation income not more than the statutory wage fixed by the Regional Tripartite Wage and Productivity Board are considered minimum wage earners and are therefore entitled to exemption from paying income tax,” said Annie Geron, PSLINK general secretary.

“This runs in contrast to what the draft implementing regulations stipulates as the latter creates its own qualifications of who should be covered by the tax exemption package, consequently redefining who a minimum wage earner is,” Geron said.

The state workers’ group was referring to the set of conditions under the draft regulations which state that workers whose basic pay are equal to the minimum wage but receive additional compensation such as commissions or honorarium, benefits in excess of the statutory tax-exempt amount of P30,000, taxable allowances and other taxable income other than the basic pay, holiday pay, overtime pay, hazard pay and night shift differential pay, and other income not subject to final tax shall not be considered as minimum wage earners.

Hence, their entire pay including whatever excess in benefits and additional income that they receive will be subjected to income tax.

PSLINK also condemned as unfair and unlawful the proposal to implement the increase in personal and additional exemptions only to income earned from the month of July. This, according to the state employees union, diminishes the benefits intended by the law to minimum wage earners and individual workers who will benefit from the increased tax exemptions.

“The proposed regulations also violate a previous Supreme Court decision in the Umali v. Estanislao case which ruled that increased tax exemptions should cover compensation income earned for the entire year,” Geron said.

In addition, the group criticized the draft regulations for being unnecessarily stringent with its various administrative requirements and procedures.

The union claimed the required filing of updated exemption status even if there is nothing to update under pain of "disallowance" of any personal or additional exemptions and the filing of quarterly summary lists make compliance excessively cumbersome for both employers and their workers. “We don’t understand why the BIR and the DoF have to complicate the rules for implementing the tax exemption law,” Geron said.

“Instead of providing relief, the draft regulations impose undue burden to employees and employers alike. This is particularly true for the public sector which is already reeling from loads of administrative work.”

PSLINK also said the Arroyo administration may be using the draft regulations to make it difficult for employees to benefit from tax exemption law as its implementation will result to a drop in one of their main sources of revenue.

But the national union argued that the workers should not be made to pay for any reduction in revenue collection that will result from the implementation of the tax relief package law.

“The administration could very well offset their loss in revenue from the workers’ income taxes if only it would stamp out corruption that drains away much-needed resources that could have otherwise gone for public services,” Geron said.

“The tax relief package law is already too little, too late. Workers are already overwhelmed by the high prices of food and fuel. We shouldn’t be made to wait any longer for the proper implementation of the tax exemptions," she said.

Depressed Wages Result To Over-employment In Philippines

MANILA (Mindanao Examiner / 14 Jul) – The Trade Union Congress of the Philippines (TUCP) on Saturday said depressed wages have resulted in the over-employment of some 7.6 million workers in the country.

The figure is nearly one-fourth of all employed Filipinos, it said. "Wages here are grossly inadequate. This is why a growing number of labor force participants are being driven to seek extra work and additional income," TUCP spokesperson Alex Aguilar said in a statement sent to the Mindanao Examiner.

He said workers are being forced to toil longer hours simply because their take home pay is not enough to cover the daily cost of decent living.

Aguilar was reacting to a government report indicating that nearly five of every 20 employed Filipinos were found to be over-employed last year.

The Bureau of Labor and Employment Statistics (BLES), an attached agency of the Department of Labor and Employment, prepared the report, he said.

“Collated from the National Statistics Office's quarterly labor force surveys, the BLES report showed that of the 33 million Filipinos on the job, about 23 percent or 7.6 million were over-employed,” he said.

Aguilar described the reported massive over-employment as “a labor market distortion,” caused primarily by low and insufficient wages.

“This is a distortion because if a person is earning enough for an eight-hour job, then he or she would not have to look for additional work that ought to be performed by someone else who is totally jobless or underemployed,” Aguilar said.

The TUCP has a pending petition for a P75-increase in the statutory regional minimum wage for workers in Metro Manila. The regional tripartite wages and productivity board began deliberating on the petition last week.

"We are definitely counting on the wage board to provide instant relief to our workers," Aguilar said.

Employers said an increase in wages would only aggravate unemployment.“That is old hat. Those opposed to giving workers higher wages always try play up and exaggerate the ghost of job losses,” Agular said.

“On the contrary, higher wages will drive up personal consumption expenditure, create new demand for good and services, and thus prop up domestic industries and employment,” he said.

The BLES report indicated that more than half of all over-employed Filipinos, or about 4.1 million, were men.

The report also showed that the bulk of the over-employed -- 58.5 percent or 4.4 million -- worked for extra income. About 40 percent or three million gave "job requirement" as another reason for working excessively.