Increase tax exemptions for ordinary workers –teachers’ solon


4 December 2012

ACT Teachers Party-List Representative Antonio Tinio filed a bill proposing to increase the non-taxable incomes of employees in the public and private sectors.

If passed into law, HB 6723 will increase the basic personal exemption (BPE) from P50,000 to P75,000 and the additional exemption (AE) from P25,000 to P40,000 per dependent, usually the taxpayers’ children below 21 years old. The BPE and AE are portions of the income that may not be taxed by the government.

Tinio noted that the income tax exemptions have not kept up with increases in the cost of living as well as rising wage and salary levels in the private and public sector since they were last set in 2008 through Republic Act 9504. He explained that in 2008, the basic personal exemption of P50,000 was 68% of the annual salary of the lowest-paid government employee (Salary Grade 1 at P6,149 per month), 33% of that of a middle-level government employee (Salary Grade 11, P12,748 per month), and 6% of that of the Philippine President (Salary Grade 33, P69,878 per month).  It was 42% of the annual basic pay of the minimum wage earner in the private sector in the National Capital Region (P382 per day).

The basic personal exemption now stands at 46% of the annual salary of the lowest-paid government employee (Salary Grade 1 at P9,000 per month), 22% of that of a middle-level government employee (Salary Grade 11 at P18,549 per month), 3% of that of the President (Salary Grade 33 at P120,000 per month), and 35% of that of the minimum wage earner (P11,780 per month). “In short, fixed-income earners are now enjoying proportionally less exemptions and are burdened with a heavier income tax,” said Tinio.

“This is a step towards making our tax laws more progressive and equitable to the economic conditions of majority of the income taxpayers,” said Tinio. “Congress should mould a tax law under which income earners from the lowest strata, especially purely compensation income earners, are taxed less and given more opportunities to lower their taxable incomes. This is the clamor of teachers, employees, and low-income workers.”

“As our tax law stands,” Tinio added, “they have minimal chances of reducing their taxable incomes. Most of the allowable exemptions are fully enjoyed exclusively by corporate taxpayers.”

HB 6723 also proposes to oblige the Commissioner of Internal Revenue to annually review the BPE and AE in relation to current living costs and recommend to Congress necessary adjustments.

Tinio urges the House leadership and President Aquino to seriously consider enacting HB 6723, especially in light of the coming holidays. #