BIR bucks bills to raise tax exemptions

Bureau of Internal Revenue building

MANILA, Philippines—Revenue officials on Tuesday rejected several bills seeking to raise the tax-exemption ceiling of the 13th-month pay and other benefits.

However, legislators have refused to accept the Bureau of Internal Revenue’s position, insisting that the measure that would help wage earners cope with the ever-increasing cost of goods was long overdue.

The lawmakers, who sit in the House ways and means committee, downplayed the adverse effects it would have on government revenues, arguing that any decrease in collections because of the higher exemptions would be offset by the boon from increased spending power, in the form of additional VAT collections or taxes on bank deposits.

At a hearing on Tuesday, officials from the BIR, Department of Finance and National Tax Research Center said they opposed the proposals to raise the exemption ceiling from P30,000 to an amount ranging from P40,000 to P75,000 because of the potential revenue losses.

Revenue losses

The revenue losses could range from P10.3 billion to P436 billion, according to Finance Undersecretary Jeremias Paul.

If Congress was bent on increasing the exemptions, it should allow the government to make up for the losses in the form of a new revenue measure or reassessment of the fiscal incentives granted to big corporations, Paul said.

He also said there was a need to look at the bigger picture, noting that Congress had also passed laws exempting minimum wage earners from the income tax and increasing personal exemptions.

BIR assistant commissioner Marissa Cabreros said the revenue bureau was opposed to any measure that would decrease revenue and that every centavo counts.

NTRC chief Trinidad Rodriguez also pointed out that the government needs more funds for rehabilitation of calamity-stricken regions, adding that a decrease in revenue might undermine the country’s economic status.

Ceiling

But the ways and means committee chair Rep. Romero Quimbo said the National Internal Revenue Code provides for the P30,000 ceiling to be raised and the revenue agencies should have done this in the past two decades.

Quimbo said the BIR and DOF had not adjusted the ceiling over the years despite inflation and the increases in salaries and even if they are supposed to do so under the law.

When the P30,000 ceiling was first set in 1997, it covered almost all government employees.

“A timely reminder to the revenue agencies is we have to strike a balance. It’s anachronistic bordering on insensitive of revenue agencies for such an adjustment not to have taken place on your own volition,” he said.

Elbow room

He said this exemption was meant as a social legislation, to give wage earners enough elbow room in December to cope with added costs and to foster goodwill.

Party-list member Antonio Tinio (ACT Teachers), one of the authors of the bill seeking to raise the exemption ceiling, said officials should look at the measure as a means of distributing the gains of economic growth. One way to do this is through increased exemptions for lower- and middle-income earners.

Another party-list member, Neri Colmenares (Bayan Muna), said the government has saved billions of pesos every year, which is why he said he could not accept the revenue officials’ arguments against the proposed measure.

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