Vol. XXI, No. 212 [ Business World Online ]
Thursday, May 29, 2008 | MANILA, PHILIPPINES
LAWMAKERS have decided to speed up the passage of a tax relief bill for workers, with the House of Representatives yesterday agreeing to have the Senate version of the priority measure sent straight to the President for signature.
The House — which had wanted to squeeze more taxes from professionals and self-employed individuals to offset revenue losses from a provision reducing the income of salaried workers subject to the income tax — recalled the bill it approved early this month.
It instead adopted a Senate version passed just this Tuesday to avoid bicameral conference committee wrangling.
There is no need for a reconciled bill and customary ratification in both houses, said Senator Francis Joseph G. Escudero, chairman of the Senate ways and means committee.
Once Senate President Manuel B. Villar, Jr. and House Speaker Prospero C. Nograles sign the "enrolled bill," it will be sent immediately to Malacañang.
Confirming the House move, Antique Rep. Exequiel B. Javier — Mr. Escudero’s counterpart in the chamber — told BusinessWorld the Senate version would also offset losses from the tax relief.
The Senate version dropped the House’s Simplified Net Income Taxation Scheme or SNITS — which would have limited the types of expenses that can be deducted by professionals such as doctors, lawyers, and athletes from their taxable income, a loophole that has allowed many wealthy taxpayers to pay lower income tax.
Under the scheme, professionals have the option of doing away with the tedious process of itemizing deductions supported by receipts by simply deducting a standard 40% from gross earnings.
The current tax code allows only a 10% Optional Standard Deduction (OSD) with practically no limits, which encouraged taxpayers to file itemized returns to lower tax payments.
The Senate-approved OSD was also extended to corporations.
The Finance department had backed the SNITS, saying it was way of making the tax burden equal across taxpayers considering wage earners have no escape from taxes with withholding taxes deducted from salaries every pay day.
Finance department research director Ma. Lourdes B. Recente last night said the Senate version was also acceptable.
Mr. Escudero has said revenues from the OSD could reach P15.03 billion, which would offset the P14.25 billion in revenue loss from higher individual tax exemptions.
The individual exemption will be raised to P50,000, compared to current exemption levels of P20,000 for single workers, P25,000 for a head of family, and P32,000 for married individuals.
The additional exemption for up to four dependents was also raised to P25,000 for each dependent, from the current P8,000.
"Our main objective is to give a tax relief to individual earners," Mr. Javier said. "It’s better to pass the Senate version than be stuck in long debates and let our wage earners suffer in the rising costs of basic commodities," he added.
Ms. Recente said: "The Senate’s version has its own way of mitigating the impact of increasing the tax exemptions — the 40% OSD for the self-employed and for corporations, which for us is also a sound provision in place of SNITS."
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