Senators reject BIR’s ‘invalid’ order to tax health premiums

The head office of the Bureau of Internal Revenue in Quezon City. File photo from AFP

Senators rejected on Tuesday the “invalid” order of the Bureau of Internal Revenue’s (BIR)  to tax health card premiums.

Senator Francis “Chiz” Escudero, a lawyer, explained that only Congress, not the BIR, has the power to tax.

“Only Congress has the power to tax. Not the BIR,” Escudero told INQUIRER.net  in a text message.

“Nowhere in RA 10963 did it state that it was the intent of Congress to so tax health card premiums,”  he said.

The senator was referring to Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (Train).

“RMC (Revenue Memorandum Circular) 50-2018 is a usurpation of Congress’ inherent power to tax and is therefore invalid,” Escudero went on.

He then urged the BIR to “reconsider its issuance or, in the alternative, for affected parties to question it before the Courts.”

“At a time when we are trying to curb inflation, the BIR is not helping at all…,” Escudero said.

Senate President Pro Tempore Ralph Recto echoed   Escudero’s opinion, saying there was nothing in the law that says health card premium should be subject to tax.

“The BIR taxing health card premiums will not further the government’s objective of having a healthier citizenry. BIR should refrain from taxing health insurance premiums,” Recto said in a separate text message.

“It’s not in the law to tax them (health card premiums),” he stressed.

What they should implement instead, Recto said,   is a provision of the law, which exempts maintenance drugs for the heart, diabetes from value-added tax starting January next year.

“One of my amendments. That’s what they should implement,” he further said.

Senator Sonny Angara, chair of the Senate committee on ways and means, also asked the BIR earlier to withdraw its order.

Under the BIR’s memo, Angara said premiums on health cards paid by the employer for all employees would l be included as part of bonuses and benefits which are subject to the P90,000 tax-exempt threshold.

“In effect, the circular reverses previous BIR ruling and regulations that premium on health cards shall be tax-free,” he said.

Angara said it is “crucial” for the BIR to immediately  “clear up the regulation at once”  as employers are set to release the 13th-month pay and Christmas bonuses of their employees in the coming weeks./ac

READ: Angara urges BIR to withdraw memo taxing health card premiums