More groups support lower income tax rate – DoF

The Department of Finance (DoF) said various organizations are backing the “long-overdue” reforms in personal income tax (PIT) rates and other measures under the proposed Comprehensive Tax Reform Program.

The tax reform package, as contained in House Bill (HB) 4774, aims to lower PIT rates from 32 percent to 25 percent, except for the ultra-rich, and exempt compensation earners with a net taxable income of P250,000 and below from paying an income tax.

Trade Union Congress of the Philippines (TUCP) Executive Board member Arthur Juego said at a recent hearing of the House Ways and Means Committee that TUCP welcomes the government initiative to introduce reforms in the tax system, most especially the current income tax structure.

Juego was quoted as saying that the proposed PIT reforms will “provide economic relief to workers who need to increase their take-home pay as prices of basic necessities and services such as food, water, electricity, medicine, housing and transportation are constantly increasing.”

Meanwhile, Financial Executives of the Philippines (FINEX) President Benedicta Du-Baladad said the organization fully supports HB 4774, because it’s simple and progressive approach to leveling the playing field.

“For progressivity, we thought that re-bracketing the income brackets to make sure that basic income that is considered subsistence level, sufficient enough to cover the subsistence level of a certain individual or family, has been exempted,” Baladad said.

“On the other hand also, for the middle-income individuals that the tax has been reduced compared to those which are on the higher income [brackets],” she said.

On the other hand, National Tax Research Center Executive Director Trinidad Rodriguez noted that under HB 4774 the P250,000 threshold is net of de minimis benefits, mandatory contributions and the first P82,000 of the 13th month pay and other bonuses. Effectively, what will be exempt in terms of gross compensation income is actually greater than P250,000, she said.

That will benefit almost 99 percent of the compensation income earners, she said.

“We fully support the lowering of the personal income tax. This has been long overdue; it’s been [unchanged]for almost two decades. It’s just right that we reduce the tax rate and widen the taxable income brackets to address the so-called bracket creep. And this will also correct some of the inefficiencies and inequities in our present tax system,” Rodriguez said.

The Institute for Labor Studies (ILS), an attached agency of the Department of Labor and Employment (DoLE) also supports HB 4774.

OIC-Deputy Executive Director Brenalyn Peji said ILS is backing HB 4774. “The DoLE, in general, supports those bills that will promote the welfare of our minimum wage earners, and even those who are earning above-minimum wage,” she said.

The DoLE is one with the position that a fairer, simpler and more effective taxation system will encourage or promote a more conducive environment for investments. Eventually, it will promote employment generation which can address standing issues on unemployment and underemployment, Peji noted.

The Nutritionist-Dietitians’ Association of the Philippines informed the committee that it also supports HB 4774, particularly the restructuring of income brackets and reduced tax income taxes.”

“[Our organization has for its members] the people who are employed mostly in hospitals and public health agencies and institutions, so we depend on income from salaries earned,” said president Dr. Adela Jamorabo Ruiz.

“We appreciate this creation of a tax system that is simpler, fairer and more efficient. We do hope that these reforms will be expedited considering that professionals are taxed heavily,” she said. - By MAYVELIN U. CARABALLO, TMT on March 15, 2017 Business

TUCP, FINEX lead groups for DOF income tax reforms

MANILA, March 15 - Various organizations led by the Trade Union Congress of the Philippines (TUCP), Financial Executives of the Philippines (FINEX) and the National Tax Research Center (NTRC) are backing the “long-overdue” reforms in personal income tax (PIT) rates proposed by the Department of Finance (DOF) along with other measures to make the tax system simpler, more equitable and more efficient, especially for low- and middle-income taxpayers.

The DOF-proposed tax reform package, as contained in House Bill 4774 authored by Quirino Rep. Dakila Carlo Cua, aims to lower PIT rates from the current 32 to 25 percent, except for the ultra-rich, and exempt compensation earners with a net taxable income of P250,000 and below from income taxation.

TUCP’s Arthur Juego said at a hearing of the House ways and means committee, which is chaired by Rep. Cua, that the labor group “welcomes the initiative of the government to reform the tax system, most especially the current income tax structure.”

Juego told lawmakers at the committee hearing that the proposed PIT reforms will “provide economic relief to workers who need to increase their take-home pay as the prices of basic necessities and services such as food, water, electricity, medicine, housing, and transportation are constantly increasing.”

The Cua-chaired committee is tackling HB 4774 and more than 20 other pending bills seeking lower PIT rates.

FINEX president Benedicta Du-Baladad, for her part, said that that the organization, as a whole, fully supports HB 4774 because of its “features of progressivity, simplification and leveling the playing field.”

“For progressivity, we thought that re-bracketing the income brackets to make sure that basic income that is considered subsistence level, sufficient enough to cover the subsistence level of a certain individual or family, has been exempted,” Baladad said.

“On the other hand also, for the middle-income individuals that the tax has been reduced compared to those which are on the higher income [brackets]," she said.

NTRC Executive Director Trinidad Rodriguez noted that under HB 4774, the P250,000 threshold is net of de minimis benefits, mandatory contributions and the first P82,000 of the 13th-month pay and other bonuses, “so effectively, what will be exempt in terms of gross compensation income is actually greater than P250,000.”

“So that will really benefit almost 99 percent of the compensation income earners in terms of reduced tax rates,” she said.

“We fully support the lowering of the personal income tax. This has been long overdue; it’s been [unchanged] for almost two decades. It’s just right that we reduce the tax rate and widen the taxable income brackets to address the so-called bracket creep, and this will also correct some of the inefficiencies and inequities in our present tax system,” said Rodriguez.

The Institute for Labor Studies (ILS), an attached agency of the Department of Labor and Employment (DOLE) likewise expressed its support for HB 4774. Its OIC-Deputy Executive Director Brenalyn Peji said ILS is backing HB 4774 “as these are supportive of the legislative agenda of President Duterte.”

“The DOLE, in general, supports those bills that will promote the welfare of our minimum wage earners, and even those who are earning above minimum wage, Peji said.

She added that “the DOLE [is] one with the position of the DOF that a fairer, simpler and more effective taxation system will encourage or promote a more conducive environment for investments, which will eventually promote employment generation which can address our standing issues on unemployment and underemployment.”

The Nutritionist-Dietitians' Association of the Philippines informed the committee that it is also supporting HB 4774, particularly “the restructuring (of) the income brackets and the reduced tax imposed on income taxes.”

“[Our organization has for its members] the people who are employed mostly in hospitals and public health agencies and institutions, so we depend on the income from salaries earned,” said the group’s president, Dr. Adela Jamorabo Ruiz.

“We appreciate this creation of a tax system that is simpler, fairer and more efficient. We do hope that these reforms will be expedited considering that professionals are taxed heavily,” she said.

HB 4774, which represents Package One of the DOF’s Comprehensive Tax Reform Program (CTRP), also provides for revenue-enhancing measures to offset the revenue erosion from the proposed cut in PIT rates.

According to DOF Undersecretary Karl Kendrick Chua, those earning between the above-minimum wage rate and P22,000 a month will pay zero tax under HB 4774.

The first P82,000 in the 13th-month pay and other bonuses will be exempted from the PIT computation.

These PIT proposals will primarily benefit public school teachers, nurses, police and military officers, government employees, call center agents among other compensation earners in the public and private sector.

HB 4774, Chua said, will shift the tax burden to rich taxpayers.

Chua pointed out at the House hearing, though, that taxing the ultra-rich through their income is not enough because they comprise only less than 1 percent of the country’s individual taxpayers, based on BIR data. Those with a net taxable income of over P80,000 comprise only 3 percent of the individual taxpayer base.

The PIT reforms will lead to revenue losses estimated at P63 billion in the second half of 2017, P138 billion in 2018 and P152 billion in 2019, Chua said.

Thus, to raise enough funds for the Duterte administration accelerated spending on infrastructure, education, health, and social protection for the poorest of the poor, a set of revenue-enhancing measures is also included in HB 4774.

Finance Secretary Carlos Dominguez III said the Duterte administration’s target is to ramp up spending on infrastructure to P1.73 trillion; on education and training to P1.27 trillion; on health to P272 billion; and on social protection, welfare and job generation for the poorest of the poor to P509 billion by 2022--for a total public investment budget of P2.2 trillion over the medium term.

Among the revenue-offsetting features of the bill are provisions expanding the value-added tax (VAT) base but retaining exemptions for seniors and persons with disabilities, and adjusting the excise taxes on automobiles and fuel, which will hit rich consumers the most as these are all consumption taxes.

Estate and donor taxes will also be reduced to a flat 6 percent under the tax reform bill.

HB 4774 also includes legislated administrative reforms at the Bureaus of Internal Revenue (BIR) and of Customs (BOC) such as a fuel marking and monitoring system to prevent oil smuggling, the use of e-receipts, the mandatory connection of the point-of-sale (POS) system of all establishments to the BIR, and the relaxation of bank secrecy laws for investigating and combating tax fraud

Complementary reforms to HB 4774 include introducing a new tax on sugar-sweetened beverages, indexing the motor vehicle user’s charge to inflation, and granting an amnesty to past estate tax cases.(DOF) - PIA News

1M graduates face bleak future

One million students graduating from college this year are facing a bleak future, according to the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP).

Waiting for the graduates are the same old problems of job-skill mismatch, low wages, contractualization and unsafe workplaces, the group said.

“We don’t want to give these young [people] any false hopes. We don’t want to discourage them either, but these are the issues that confront our new graduates,” Alan Tanjusay, ALU spokesperson, said in a statement on Monday.

Citing the October 2016 Labor Force Survey, which showed close to 8 million workers in need of second jobs to augment their daily income, Tanjusay said mismatch between skills and actual jobs available was the prime driver of underemployment in the Philippines.

“Graduates are also confronted with low entry-level minimum wages. The purchasing value of the current P491 entry-level daily wage for workers in the National Capital Region has eroded to P363 a day excluding mandatory social protection, salary deductions, and transportation and meal expenses,” he said.

The graduates also face precarious and prevalent job contractualization arrangements, he said.

Known as “555” (five-month contracts) and “endo” (end of contract), contractualization is a work arrangement where workers are terminated after five months and then rehired for another five months.

“Seven out of 10 of the current 41-million-strong workforce are contractuals. Workers who were contractuals more than five years ago remain contractuals, getting the same entry-level pay without security of tenure and the benefits that they are supposed to enjoy,” Tanjusay said.

“That’s how bad and massive contractualization is,” he added.

Labor Secretary Silvestre Bello III is expected to sign an order on contractualization this week.

Bello was supposed to sign the order last week but labor and management groups asked for four days to discuss their “fundamental differences.”

Labor coalition Nagkaisa spokesperson Rene Magtubo said the proposed order was unacceptable because it still carried the “win-win” solution that workers had rejected.

Bello, on the other hand, explained that the labor department could not end contractualization.

“We have to accept the fact that there are certain works or jobs that are seasonal. We have to be ready for that, we have laws to talk about,” he said.

“Our position is, there are certain contractual arrangements that are allowed, which we intend to regulate. House Bill No. 444 will definitely prohibit and criminalize contractualization and all forms of fixed-term contracts. But in the meantime that there is a law, that’s what I’m going to do, which allows certain forms of contractualization,” he added. - By: Tina G. Santos - Reporter / @santostinaINQ Philippine Daily Inquirer

Bello rapped for defying Duterte's policy directives

Labor Secretary Silvestre Bello III

VARIOUS labor groups slammed Labor Secretary Silvestre Bello III for defying the policy directives of President Rodrigo Duterte to stop contractualization by drafting a new department order which will still continue contractualization scheme.

The Nagkaisa and Associated Labor Unions chairman Michael Mendoza said the President instructed Bello to draft a new department order ending all forms of contractualization and do away with labor contractors who serve as middlemen between employees and principal employers.

“We are shocked that DoLE management has said that the DoLE can only regulate but not prohibit contractualization and all forms of fixed term employment. Section 106 of the Labor Code is crystal clear saying the Secretary of Labor may ‘regulate’ or ‘prohibit’ contractualization,” Mendoza said.

Members of the militant labor group Bukluran ng Manggagawang Pilipino also condemned Bello’s latest draft of the department order that contradicts Duterte’s directive to abolish contractualization, an order he reiterated when he met with labor leaders.

Mendoza said the legal stance smacked of intellectual dishonesty and deception.

“We therefore affirm that the context of any new department order must be one of total prohibition. That was reinforced by the President when he spoke with Labor and Secretary Bello on Feb. 27. President Duterte has said he will not renege on his promise to end contractualization and abhors agency hiring,” Mendoza said.

Throughout the country, the presidential commitment to end contractualization has resonated with millions of Filipinos who for the past 20 years have labored to receive the smallest of minimum wages only to be laid off after a few months.

“Presidential Spokesman Abella’s elaboration of the President’s commitment further raised massive expectations that indeed the Duterte government would bring real change through meaningful income through secure jobs,” Mendoza said.

“We are unmoved by employers and contractors in their assertion that contractualization is allowed. The billions they have earned while their workers slave at subsistence wages are testament to 25 years of injustice,” Mendoza added. - by Vito Barcelo  / manilastandard.net