Labor group backs VP’s tax proposal


A plan of Vice President Jejomar Binay to exempt workers who receive a monthly salary of P30,000 and below from paying withholding taxes once he becomes the President of the Philippines has drawn strong support from a labor federation composed of 250 unions nationwide.

Jose Sonny Matula, president of the Federation of Free Workers (FFW), on Sunday told The Manila Times that Binay’s plan would be a “good start of tax reform for the next administration [since it means]shifting the tax burden from workers to the capitalists and business.”

Shifting the burden of taxes to those who earn more is called progressive taxation, which was stipulated in the 1987 Philippine Constitution.

Binay earlier said he would make a priority the exemption of workers with a monthly salary of P30,000 and below from paying withholding taxes.

He, however, needs support from the majority both the House of Representatives and the Senate to effect his plan.

Raising tax exemptions, a hot issue in the Congress last year, was shot down by President Benigno Aquino 3rd since, he said, it would mean a loss of an estimated P30 billion in government revenues.

According to Binay, putting an end to smuggling, tax evasion and tax avoidance is a way of increasing tax collection.

This was also the idea of FFW and other labor groups, among them, Partido Manggagawa, Bukluran ng Manggagawang Pilipino, Trade Union Congress of the Philippines and Associated Labor Unions and people’s organizations such as Sanlakas.

Data provided by the United Nationalist Alliance (UNA), which the Vice President leads, showed that the government is losing P230 billion a year to smuggling of agricultural products, P30 billion from oil smuggling and P12 billion from tobacco smuggling.

UNA said the government can actually generate more than the projected P30- billion loss from reduced income taxes if smuggling is eliminated.

Matula described Binay’s plan as a “sound proposal [because it will surely]increase worker’s take home pay and [therefore realize the]living wage.”

Former Finance Secretary Margarito Teves said there are various ways of increasing governments revenue to replace income from withholding taxes of workers who will join others workers who have already been excluded from paying taxes as they receive a minimum monthly wage of P12,500.

Teves offered the sale of government assets and the privatization of a number of government-owned and -controlled corporations, fiscal incentives rationalization, fuel marking to fight oil smuggling, and continued improvement in tax administration and collection efficiency as means to ensure that collections of the Bureau of Revenue will increase.



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  1. This is true, if we will not tax wages 30,000 and below, our government would go bankrupt .why , because majority of our taxpayers is in this bracket. Binay can promised all of us heaven and earth to be elected. What we need is a new tax rate based on consumer price index and rate of inflation. This will surely lower income taxes for all of us and we still contribute for expenses that our government needs for our country. That it is now, we are over tax using the 1988 pesos valuation as the basis of our tax rate. The rate must change depending on current pesos valuation. Let us be fair and not to take advantage of our current sentiment against the BIR. These guys are just doing their job, it is the job of our lawmakers,, Congress must change the current tax rates not the BIR.