Gov’t employees decry tax on union perks

After climbing the ring with Manny Pacquiao to contest part of the boxing champion’s multimillion-dollar prize winnings, the taxman is snatching a bite from the meager bonuses and allowances of 1.7 million government employees.

Ferdinand Gaite, president of the Confederation for Unity, Recognition and Advancement of Government Employees (Courage), a national organization of government workers, said Wednesday that government employees were grumbling about the decision of the Bureau of Internal Revenue (BIR) to tax all perks and allowances, including the 13th-month pay, in excess of P30,000 this year.

“The taxation of benefits of employees will result in the reduction of the amount of the minimal benefits due them. Practically all government employees will be affected,” Gaite said in a phone interview.

“Benefits should not be taxed considering that the government employees’ take-home pay is not even enough to take them home,” he said.

Gaite said the BIR did not extensively consult government employees when it issued Revenue Memorandum Circular 46-2013 in May, notifying all state workers, both rank-and-file and supervisory employees, that benefits obtained by their unions under the collective negotiations agreement (CNA) were subject to taxes if these exceeded P30,000 when combined with other perks.

Getting by

While the Tax Code states that “other benefits” exceeding P30,000 are taxable, Gaite said the government agencies typically did not include the CNA benefits in the tax computation as a way of helping their employees get by on their meager salaries.

The memo issued by BIR Commissioner Kim Henares was meant to do away with this “gray area” by clarifying that under the Tax Code, incentives obtained through the CNA were part of “other benefits” that should be taxed if they exceeded P30,000 along with other perks.

Henares did not reply to the Inquirer’s text queries and calls.

Don’t tax benefits

Gaite said Courage’s stand was that CNA benefits should not be included in the tax computation of yearend perks.

He said the BIR’s decision was arbitrary, taken without proper consultation with the state employees.

He said this was the second major blow to government employees under the Aquino administration after putting a cap on the benefits that they could get through the CNA.

Gaite said government employees were dismayed when they saw their pay slips. Their earnings were “nearly wiped out” because their bonuses and allowances were taxed in one fell swoop by the BIR, he said.

Some government employees said the government should have applied the tax in phases to soften the impact on their daily expenses, Gaite said.

Easy targets

With an average salary of P9,000 a month and benefits of P3,000, most state workers cover their daily expenses by drawing advances on their expected bonuses for the year, he said.

“The sad thing about this is that these employees are overworked and underpaid and yet they are the first to be targeted in the BIR’s tax campaign just because they are easy targets,” Gaite said.

“It’s unfair to tax the CNA benefits, as most employees depend on these perks to make up for their below-standard-of-living wages,” he said.