Minimum wage earners' extra income taxable - DOF

The Department of Finance (DOF) wants minimum wage earners to pay taxes for income generated outside their regular earnings.

Officials said the department wants this provision clarified through the implementing rules and regulations of Republic Act 9504 or the law that increases the tax exemptions for minimum wage earners and increases the tax exemptions for regular income earners.

The Bureau of Internal Revenue (BIR) is currently finalizing the law’s implementing rules.

A source said that while minimum wage earners are now exempted from the payment of income taxes, they are still obliged to pay taxes for income they generate outside their regular jobs such as through small businesses.

The finance department also wants the government to implement the applied only starting July 2008 even as lawmakers want the law applied retroactively to January 2008.

Sources at the department said the law should be applied only starting July 2008 because it was signed only last June.

The Bureau of Internal Revenue (BIR) said it would lose roughly P28 billion from the implementation of the minimum wage law, putting in peril its P845-billion revenue target for the year.

The tax agency, the government’s main revenue earner, has asked the Finance department to lower the target because of anticipated losses from the implementation of the minimum wage law.

Fiscal authorities, however, refused to grant the BIR’s request, saying that the agency needs to step up collection efforts to meet its target.