Roxas asks Teves to amend rules on tax exemptions

Senator Mar Roxas II has asked Finance Secretary Margarito Teves to amend the implementing rules and regulations of Republic Act 9504 or the law that increases the tax exemptions for minimum wage earners (MWEs) and increases the tax exemptions for regular income earners.

Roxas said that the implementing rules contain certain provisions that limit the benefits provided by the law.

The letter is aside from the petition Roxas filed before the Supreme Court seeking for the full implementation of the law, starting in January 2008 and not on a half-year basis only, starting in July 8.

Roxas, one of the authors of Republic Act 9504, filed the petition last Oct. 3.

The Department of Finance and the Bureau of Internal Revenue (BIR) already published the implementing rules last Sept. 22, stipulating that the law applies retroactively to July 2008 and not January 2008.

“Despite the fact that the matter is already pending before the Supreme Court for judicial determination, I urge your good office on its own will reconsider making the appropriate amendments to BIR Revenue Regulation No. 10-2008, in order to reflect the true intent and spirit of the law,” Roxas said in his letter.

The lawmaker said the exemptions granted by the law to provide relief to workers were subverted by the implementing rules.

Roxas pointed out that the implementing rules limit the application of the law to a “half-year basis only, commencing on July 6, 2008.

He said that it also limits the definition of MWEs by unduly taxing other benefits as well as their salaries, wages and allowances.

The implementing rules stipulated that MWEs receiving extra income from other sources are not exempted from income tax.

“MWEs receiving other income, such as income from the conduct of trade, business or practice of profession, except income subject to final tax, in additional to compensation income are not exempted from income tax on their entire income earned during the taxable year,” the implementing rules said.

A Finance official explained 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 implementing rules also stressed the exemption granted for holiday pay, overtime pay, night shift differential pay and hazard pay earned by employees in the public sector.

Because of the minimum wage law, the BIR expects to miss its P845 billion collection goal for 2008. The BIR estimates that it would lose P11.8 billion from the implementation of the minimum wage law starting July 2008.