House to pass pay hike bill but not tax reform

AP FILE PHOTO

THE HOUSE of Representatives is expected to approve today the proposed Salary Standardization Law (SSL) of 2015 after Speaker Feliciano Belmonte Jr. obtained President Aquino’s endorsement of the bill that seeks to grant a total of P226 billion in pay hike to 1.3 million government workers.

But Belmonte said he still had to get Mr. Aquino’s certification of the measure that proposes cuts in individual and corporate income tax rates, despite the “strong pitch” that he and Senate President Franklin Drilon made to the Chief Executive and his economic managers on Monday.

The President “did not say ‘no,’” Belmonte said on Tuesday. “He only said we have said our piece. At some point we expect [him and his economic managers] to say whether they agree or [not],” he added.

“Higher salaries without tax reform means these government employees would go to higher tax brackets, pay more taxes, and take home less [pay],” Sen. Sonny Angara said.

Angara, as chair of the Senate ways and means committee, spearheading moves in the Senate to convince finance officials to support tax reform bills. But under the Constitution, the Senate cannot approve such measures without the House of Representatives doing so first.

Without Mr. Aquino’s certification of the tax bill as “urgent,” it may “no longer be viable,” the Speaker said.

House Majority Floor Leader Neptali Gonzales II said the President’s certification of the SSL was crucial to getting the quorum needed to pass the measure.

“If we get the House appropriations committee’s approval by [this] morning and we receive the President’s certification [today], and if by a stroke of luck we get a quorum [this] afternoon, then don’t be surprised if we’re able to pass [House Bill No. 6268] on second and on third and final reading,” Gonzales said in a briefing.

He added that Congress had only until Dec. 18 to wrap up its legislative agenda before lawmakers start to focus on the respective campaigns of its members starting January.

Reverse ‘brain drain’

The House appropriations committee chair Davao City, Rep. Isidro Ungab, said he expected his committee to approve today the SSL measure that, Gonzales said, would boost compensation for high-level positions in government to reverse the “brain drain” of state lawyers, engineers and directors to the private sector.

Malacañang said the P229-billion total pay hike would lift the salaries of 1.3 million government workers and executives by an average of 45 percent.

But ACT Teachers Rep. Antonio Tinio disputed this, and said only top-level executives would enjoy a massive pay hike while two-thirds of the bureaucracy would get only a “paltry” raise.

In a press conference, Tinio described Malacañang’s statement as “misleading,” and said the SSL would favor only those occupying top posts and already enjoying high salaries.

He cited as example the case of an entry-level teacher whose salary under the SSL would increase by 11.89 percent, from P18,549 a month this year to P20,754, after four annual hikes ending in 2019.

The pay hike would amount to no more than an additional take-home pay of P24 a day, not even enough to “buy one kilo of rice,” Tinio said.

At most, subprofessionals and head teachers as well as nurses, police, soldiers and firefighters would get no more than a 22-percent salary hike under the SSL, he added.

Same bracket as billionaires

In contrast, Tinio said, government workers in executive level positions with Salary Grade 25 or higher, would get a pay hike of between 77 percent to 233 percent, which would cover the President under Salary Grade 33.

The biggest losers, the party-list representative said, were midlevel employees whose income would hit the P500,000 mark, pushing them to the maximum tax bracket of 32 percent, the same rate paid by billionaires.

“All because the President doesn’t want to reform the income tax rate [brackets],” said Tinio.

The measure proposing cuts in individual and corporate income tax rates remains pending in the House ways and means committee as President Aquino has repeatedly expressed concerns over lost government revenue and fears of a downgrade in the country’s credit rating.

A loss of P30 billion in revenue is projected in the first year of implementation of the proposed law.

Under the proposed measure, the tax bracketing system will be revised such that individual taxpayers earning P180,000 and below a year are exempt from paying taxes, while those earning from P180,000 to P500,000 will pay 9 percent.

Those with a yearly income of P500,000 to P10 million will pay 17 percent, while those who earn more than P10 million a year will pay 30 percent.

At present, all individual taxpayers earning P500,000 and above are taxed a uniform 32 percent.

Lack of quorum

Despite their “vigorous presentation” of the reduced tax measure to Mr. Aquino , Belmonte said that at certain points, Finance Secretary Cesar Purisima was “contradicting us, saying we shouldn’t be doing a piecemeal thing on the issue of tax scheme.”

Aside from the President’s reluctance, the Speaker cited the shortness of time and the lack of a quorum as additional constraints on the passage of the bill.

“Since we know that the whole tax system requires overhaul, we should have started this one or two years ago,” Belmonte said, adding however that he was not giving up on the bill.

The House official also acknowledged the difficulty of getting a quorum, “this [being] campaign season.”

While the SSL measure could benefit 1.5 million government workers, Angara said the government should also help the three to four million workers in the private sector by approving the reduced tax measure to take inflation into account.

“This will provide long overdue and comprehensive relief to working Filipinos,” said Angara who added that adjusting taxable income levels would be a boon to workers in the public and private sector.

The senator said that government workers who stood to receive higher wages would also fall under higher tax brackets, unless there was income tax reform. With a report from Leila B. Salaverria