House to rush tax exemption bill

The House of Representatives will rush a bill that would exempt millions of minimum wage workers from paying income taxes.

"We have to work on that bill to regularize and make legal what Malacañang has promised," Tarlac Rep. Jesli Lapus, ways and means committee chairman, told The STAR yesterday.

He was referring to President Arroyo’s directive suspending the collection of the 10 percent withholding tax from workers receiving the minimum wage with the intention of exempting them from paying income taxes.

Minority Leader Francis Escudero said he and his opposition colleagues would support the proposal to give workers a tax relief.

"We can agree with the majority bloc to expedite the passage of this measure," he said.

Lapus said while the President can order the suspension of the collection of the withholding tax, she cannot grant a tax exemption. "That power belongs exclusively to Congress."

He said his committee would begin hearings on Jan. 17, a day after Congress resumes session, on bills seeking to grant a tax exemption or an increase in personal and individual exemptions.

"We should be able to approve a bill on either a tax exemption or increased exemptions in two to three months. My preference is that we increase the rates of exemptions so that all fixed-income earners will be covered," he stressed.

The present rates of exemptions are P32,000 each for working spouses, P25,000 for a head of family, P20,000 for a single taxpayer, plus P8,000 for a maximum of four dependent children.

This means that at these rates, a family of six with both spouses receiving the daily wage should be earning P96,000 a year or less to be exempt from income taxes.

Lapus said his committee would have to obtain pertinent data from the Department of Finance (DOF) and perhaps the Department of Labor and Employment on the incomes and personal circumstances of minimum wage earners.

He said he has made initial inquiries from the DOF, but that finance officials could not provide him with the data he needs.

He said the bill on increased personal exemptions would be tackled together with another measure simplifying the taxation scheme for self-employed individuals and professionals.

He pointed out that while there is practically no tax leakage on the part of salaried workers, there is at least a 70 percent collection "inefficiency" on the part of self-employed businessmen and professionals like doctors and lawyers.

He also said he sees no problem with the Senate insofar as proposed increased exemptions are concerned.

His Senate counterpart, Sen. Ralph Recto, has a bill that seeks to adjust exemptions so that salaried individuals would pay 20 percent less than what they now pay in income taxes. — Jess Diaz