DOF backs bill giving tax relief to workers

The Department of Finance (DOF) has expressed its support to a bill which seeks to give tax relief to workers and at the same time provides a uniform 40 percent allowable reduction for corporations.

The DOF said the bill will raise P780 million in additional revenues for the National Government.

The bill, authored by Sen. Francis Escudero, chairman of the Senate ways and means committee, raised the tax-exempt income of workers to P50,000.

The current exemption is P20,000 for single workers, P25,000 for a family head, and P32,000 for married individuals.

According to the bill, the additional exemption for up to four dependents was raised to P25,000 for each dependent, from P8,000 previously.

“As much as we want to maximize the exemption because of the continuous rising prices of basic commodities, we have to see the need of the government in terms of revenue generation,” Escudero said.

Furthermore, the Senate bill gives professionals and self-employed individuals the option of deducting a uniform 40 percent from gross sales or receipts to arrive at taxable income subject to the income tax, instead of itemizing deductions.

Under the tax code, the optional standard deduction is only 10 percent.

The standard 40 percent deduction will also apply to corporations, which are subject to a 35 percent income tax, under the Senate bill.

Officials at the finance department said the Senate version could raise an estimated P780 million because it is simpler and could encourage more taxpayers to pay their taxes.

Secretary Margarito Teves has said he is in favor of the tax relief bill as long as it would have no negative impact on state coffers.