President Aquino promised to listen to his boss—the Filipino people. And yet his administration is turning out to be most insensitive.
There will be no pay hike for government employees this year and the next, not until 2016 if ever the Department of Budget and Management completes its assessment of the compensation classification system (CCS) of government employees, which it doesn’t seem in a hurry to do so.
And yet the Bureau of Internal Revenue (BIR) is imposing new taxes on government employees’ financial benefits and allowances.
Talk about a double whammy.
These allowances and other benefits, which include honoraria, food subsidy, hospitalization and medical benefits, clothing, cost-of-living and transportation allowances, and monetized value of leave credits were never taxed before.
But Revenue Memorandum Order (RMO) 23-2014 that the BIR issued in June and started implementing last month imposed a 30% to 32% tax on these benefits.
Again, so insensitive.
The benefits that government employees receive are supposed to support their families’ everyday needs, precisely because their compensation is not enough. Most of them are buried in debt, borrowing in advance their monthly salaries or relying on credit cards to make it until their next payday.
Most government workers are not high officials with top salaries and perks, who get paid in thousands just for attending the board meetings of their government corporations, or are driven around in gas-free vehicles.
Most government workers’ salaries are eaten up by their household bills, their pay hardly enough to cover the skyrocketing prices of basic commodities, oil, gasoline, electricity and water bills.
Government workers really need these fringe benefits to survive. Why charge them such a substantial amount in taxes?
Why not go after the smugglers? From 2002 to 2011, the government lost more than P1.33 trillion in revenue due to smuggling, according to the Federation of Philippine Industries.
By imposing additional burdens on the already overburdened state workers you are taking away their incentive to deliver efficient service to the general public.
How can you work properly or focus your attention on the needs of the citizen in front of you if you are worried about where to get your child’s tuition or how to pay your overdue electricity bill?
Indeed, the BIR’s oppressive deductions on their benefits in the absence of salary increases tempts state workers to commit graft and corruption just to make ends meet.
Former Senate President Aquilino Pimentel Jr. led the government employees in filing the petition before the Supreme Court assailing the BIR’s new memorandum imposing hefty taxes on their benefits and bonuses.
We thank him for taking up the cudgels for our state workers. We in the Trade Union Congress of the Philippines fully support this fight.
RMO 23-2014 of the BIR must be nullified. According to the petitioner/government employees, it is unconstitutional as it usurps the power and authority of the legislature in defining new offenses and prescribing penalties, particularly on local government units.
“The duties imposed on the local government officials mentioned in the paragraphs immediately preceding thrash the principles of decentralization and local autonomy set forth in the Local Government Code of 1991, Republic Act 7160,” the petitioner said.
The petitioner said the BIR also violated Section 2 of the National Internal Revenue Code when it implemented the RMO without necessary approval of the secretary of finance.
Tax measures should be just, fair and executed equitably but here they are oppressive and unfair; and this particular one really calls for second thought and appropriate action.
I already said this in a previous column but I will never get tired of saying it: Workers are already overburdened by taxes in this country.
The Philippines has the third highest individual income tax rate in the Association of Southeast Asian Nations (Asean), after Thailand (37%) and Vietnam (35%).
Then there is the value added tax, which at 12 percent here is higher than Malaysia’s 10 percent, Singapore’s 7 percent, Thailand’s 7 percent, Australia’s 10 percent and Japan’s 5 percent.
The VAT causes prices to increase, reducing the worker’s ability to purchase goods and services. Worker’s wages further decline because their purchasing power declines.
Now the government is even deducting a third of the benefits of poorly paid state workers.
Again, we would not complain if we are getting our taxes’ worth but every day we experience absurdities that illustrate the contrary, like flooded, traffic-choked and crime-infested streets, poor public services, and sickening corruption from the lowest to the highest ranks in government.