Government workers ask SC to stop new taxes

By: Tarra Quismundo - 10 years ago

RAGE OF THE ‘OVERTAXED’ Civil servants in red shirts wear red and black ribbons on their arms and wrists to protest a tax on their benefits. From Taft Avenue, the protesters marched toward the Supreme Court building on Padre Faura, Manila. Court employees went out of the building to join the marchers. JOAN BONDOC

MANILA, Philippines–Already struggling to survive on their meager pay, government employees on Wednesday questioned in the Supreme Court new taxes on allowances, bonuses and other benefits of all state workers and officials estimated at more than 1 million.

With former Sen. Aquilino Pimentel Jr. as their pro bono counsel, 12 employees’ associations and confederations representing an estimated 300,000 government workers across the country asked the court to stop the Bureau of Internal Revenue (BIR) from withholding taxes on their fringe benefits, saying this was unconstitutional and would further hurt their already drained pockets.

“Today, we filed a petition to fight what we think is oppressive taxation that BIR is doing, collecting taxes on allowances, bonuses and fringe benefits of government employees and officials throughout the nation,” Pimentel told reporters after filing the petition at noon Wednesday.

“I think what the BIR is doing is wrong,” Pimentel said, describing allowances and bonuses as pantawid-gutom, or “cross hunger” measure. “And then you will impose additional taxes on that aside from the withholding tax,” he said.

Hundreds of employees in red and black gathered at the Supreme Court on Wednesday, joining a protest initiated by employees in the judiciary last month that has spread in government offices across the country.

The 73-page petition questioning Revenue Memorandum Order (RMO) 23-2014 introduced on June 20 named BIR Commissioner Kim Henares and Finance Secretary Cesar Purisima as respondents.

Clarifying what’s taxable

Asked for comment, Henares said: “We’re just clarifying what income is taxable. A lot of agencies were giving bonuses and allowances but they weren’t withholding taxes.”

According to the Department of Budget and Management website, the number of government employees as of last year was 1,185,530 corresponding to “filled positions.”

Petitioners include employees’ associations of the judiciary (the Supreme Court, Court of Appeals, Court of Tax Appeals, the Sandiganbayan, lower courts), Senate, Department of Agrarian Reform, Department of Social Welfare and Development (DSWD), Department of Trade and Industry, Metropolitan Manila Development Authority, Water Districts Employees, National Housing Authority and Quezon City government.

Among the lead petitioners, the Confederation for Unity Recognition and Advancement of Government Employees (Courage), an umbrella of public sector unions, said simultaneous “red and black” protests were staged by government employees in the cities of Tuguegarao, Iloilo, Bicol, Cebu, Tacloban and Cagayan de Oro.

DSWD employees in red and black shirts joined the national day of protest declared by some government workers’ groups against Henares’ order. The employees staged a rally at their main office in Quezon City during lunch break, the same time the petition was filed in the Supreme Court. Similar protests were held in DSWD offices nationwide.

‘They are bleeding us’

Manny Baclogon, national president of the Social Welfare Employees Association of the Philippines, said: “We are not against taxes but they are bleeding us, making us their scapegoat. If they have a tax deficit problem, why don’t they review their tax incentives system, go after big tax evaders, smugglers.”

“We hope that she doesn’t take from us what she needs to fill her revenue quota. We have very little pay. But I don’t know, it seems she’s doing this just to prove that the executive is more powerful than other branches of government,” said Jojo Guerrero, president of the Judiciary Employees Association of the Philippines.

Where the taxes go

Guerrero said that although the memo was dated June 20 with immediate effect, the new tax was already reflected in the incentive pay of judiciary workers on June 15.

Ferdinand Gaite, Courage president, cited how people’s taxes only went to programs such as the controversial Disbursement Acceleration Program and the graft-ridden Priority Development Assistance Fund (PDAF), discretionary funds both deemed unconstitutional by the high court.

“The government keeps on imposing taxes and they just go to DAP and PDAF, even violating the separation of powers. We will continue to fight for a living wage and against oppressive tax measures of the government,” Gaite said.

The petition for prohibition and mandamus with a prayer for a temporary restraining order asked the court to declare as unconstitutional certain provisions of RMO 23-2014.

It seeks to prevent “the unlawful and unwarranted imposition of taxes, and their illegal and illicit collection thereof through the RMO concerned, on the nontaxable allowances, bonuses, compensations for services, and other benefits that had been enjoyed by the petitioners for some time now.”

‘Ruinous consequences’

“The RMO in question was probably hastily issued without much thought about its ruinous consequences upon the right of the petitioners to fully enjoy those allowances, bonuses, compensation for services, and other fringe benefits, thus necessitating the immediate intervention of the court,” the petition read.

The assailed tax memo lays down the “obligations of government agencies, bureaus and instrumentalities as withholding agents,” including the duty to deduct taxes from all forms of compensation given to government employees, including benefits outside of their regular pay that were previously nontaxable.

The petitioners argued that the RMO was “not reviewed” by the finance department. The implementation of the tax memo also amounted to the “over-stretched exercise of power and authority by the respondents (or, at least by the respondent commissioner) of what is justifiable under the law.”

“By taxing those fringe benefits, the government actually engages in a juggling act that is better left to circus clowns. To use a more common cliché, under the circumstances, the government is picking funds from one of its pockets, and transferring them to another,” read the petition.

In particular, the petition sought to nullify the following parts of the memo:

— Section 3, which laid down the obligation of withholding authorities to tax all forms of compensation across the bureaucracy.

— Section 4, which required bonuses above P30,000 to be taxed.

— Section 6, which required treasurers and accountants from provincial, municipal and barangay (village) governments to deduct and withhold such taxes.

— Section 7, which laid down penal provisions for authorized withholding officers who fail to make the tax deductions.

Penalties

These include a fine amounting to the uncollected tax for those who fail to remit, “a fine of not less than P10,000 and… imprisonment of not less than one year but not more than 10 years” for those who file incorrect tax information, and “a fine of not less than P10,000 but not more than P20,000 and … imprisonment of not less than one year but not more than three years” for those who pretend to have filed or withdraws a tax statement.

The petition sought to raise the taxable amount of the 13th-month pay (as stated in the memo’s Section 4), currently pegged at above P30,000 for 20 years despite inflation. Under current taxation rules, bonuses exceeding this amount are already subject to tax.

On the imperative imposed on local governments to collect the additional tax, the petitioners said: “Government officials, no matter how high or mighty … cannot on their own steam order local government officials to do this, that or any other thing without the sanction of a law mandating such an act.”

Citing the struggle of supporting his family on government pay, Supreme Court employee Albert Montinola showed his pay slip showing his P600 allowance under the Judiciary Development Fund (JDF), shaved by P2,100 in loan payments. He said 80 percent of the roughly 28,000 judiciary employees across the country have resorted to loans to augment their pay.

“Those deductions are burdensome for the rank and file. We are not rich, we are poor people. Huwag niyo po kami pag-initan,” Montinola said.–With reports from Dona Z. Pazzibugan and Paolo G. Montecillo

Originally posted at 1:09 am | Thursday, August 7, 2014