SC orders BIR to explain taxes on gov’t workers’ bonus

MANILA, Philippines - The Supreme Court (SC) has ordered the Bureau of Internal Revenue (BIR) to explain its imposition of taxes on bonuses and other fringe benefits of government workers.

The high court has required the BIR to answer the petition filed by government workers and court employees led by the Confederation of Unity, Recognition and Advancement of Government Employees (Courage) last Aug. 6 questioning the legality of Revenue Memorandum Order (RMO) No. 23-2014 that the BIR issued last June and started implementing last month.

Named respondents in the petition were BIR Commissioner Kim Henares and Finance Secretary Cesar Purisima.

In a press conference yesterday, SC spokesman Theodore Te said the BIR was given 10 days from receipt of notice to comply with the order.

In their petition, Courage also sought issuance of a temporary restraining order (TRO) against the implementation of the assailed RMO, which subjects all benefits received by employees and officers of government to 30- to 32-percent taxes.

The SC, however, deferred ruling on this plea.

Through former Senator Aquilino Pimentel Jr. as counsel, petitioners alleged that key sections in the RMO are unconstitutional.

The assailed RMO imposes taxes on allowances, bonuses, compensations for services and other fringe benefits allotted to them by their respective government departments, offices, agencies or institutions or local government units (LGUs).

“Those benefits are deemed property within the purview of the Bill of Rights of which, the said government officials and employees, including the petitioners, may not be deprived without due process of law under Article III, Section 1, Constitution,” read the 75-page petition.

In imposing the new tax measure, the BIR also violated the Constitution by “usurping the power and authority of the legislature in defining new offenses and prescribing penalties, particularly on LGUs.”

“The duties imposed on the local government officials mentioned in the paragraphs immediately preceding thrash the principles of decentralization and local autonomy set forth in the Local Government Code of 1991, Republic Act 7160,” argued Pimentel, who authored the said law.

On technical grounds, petitioners said the BIR also violated section 2 of the National Internal Revenue Code when it implemented the RMO without necessary approval of the secretary of finance.

Apart from the TRO, the groups also asked the high tribunal to issue a writ of mandamus ordering the respondents to upgrade the ceiling of P30,000 for the 13th month pay and other benefits for the concerned officials and employees of the government.

Review of tax structure

The Department of Finance will conduct a comprehensive review of the country’s tax structure that will be benefit the government and the people.

“Instead of piecemeal measures, we will revisit the whole thing. We hope its going to be more equitable and progressive with the goal of making revenues more buoyant,” Finance Secretary Purisima said when asked about the government’s position on growing calls for a reduction in income tax rates.

Purisima said the country needs a tax system that is oriented to supporting strong and sustainable economic growth.

He said the tax system serves an important role in funding quality public services that benefit individual members of the community as well as the economy in general.

He said the government would support calls to alter the current tax system as long as lawmakers make it a priority measure.

Sen. Juan Edgardo Angara last week revived calls for the passage of a measure that would lower income tax rates to encourage more Filipinos to spend and expand output.

Angara’s bill, Senate Bill No. 2149, seeks to reduce the individual income tax rate from 32 percent to 25 percent.

Sen. Ralph Recto likewise filed a bill proposing no taxes on net income below P20,000. – With Zinnia dela Peña