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By Efren L. Danao, Senior Reporter
The Senate passed Tuesday on third and final
reading the certified bill exempting minimum-wage earners from
paying income tax, and increasing the personal and additional
exemptions of taxpayers.
Sen. Francis Escudero, chairman of the Senate
Committee on Ways and Means, said the measure provides relief to
workers who are suffering from the higher cost of living.
He said the bill recognizes the minimum-wage
rate fixed by regional tripartite boards. The Department of Finance
pegged the revenue loss from the exemption of minimum-wage earners
at P3.16 billion.
Like the House version, the Senate bill also
increases the personal exemptions to P50,000 and additional
exemptions, to P25,000 per dependent up to a maximum of four. The
Finance department said the government would lose P11.09 billion
from these increases.
Escudero said that unlike the House version, the
Senate bill also exempts from income tax the holiday pay, hazard
pay, overtime pay and nightshift differential of minimum-wage
earners.
Senate against new taxes
The Senate rejected the Simplified Net Income
Taxation System carried by the House version. Escudero said that it
is a new form of taxation, and the Senate is against the imposition
of new taxes.
“We proposed instead a 40-percent optional
standard deduction [OSD] not only for the self-employed and
professionals but also for corporations,” Escudero said.
The Finance department estimated the revenues
from the optional standard deduction at P15.03 billion, to give the
government a net gain of P780 million after deducting losses due to
exemption of minimum-wage earners and increased personal and
additional exemptions of individual taxpayers.
He said that the optional standard deduction is
attractive to small firms who have no accountants.
“They will no longer be subject to audits once
they use the OSD,” he said.
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