MANILA, December 1, 2005
 (STAR) By Des Ferriols - Minimum wage earners will soon be exempted from withholding taxes, a move that is estimated to cost the government at least P400 million in foregone revenues.

The proposed exemption will be part of the Arroyo administrationís non-wage benefit package that the President is planning to announce before Christmas.

Sources from the Department of Finance (DOF) said that the Bureau of Internal Revenue (BIR) was finalizing the revenue regulation that would implement the directive to exempt minimum wage earners from the withholding tax.

Being exempted from withholding tax payments, however, will not mean that minimum wage earners will be completely exempted from income taxes.

The exemption only meant that minimum wage earners will be given the option to pay their annual income tax in bulk directly to the BIR at the end of the taxable year on April 15.

"The law already gives minimum wage earners the option of opting out of the withholding taxes, thatís why the exemption would only require a revenue regulation from the BIR," the source said. "But they still have to pay the tax on their own."

Realistically, however, the source said minimum wage earners who have been exempted from withholding tax payments are not likely to actually pay the lumpsum amount to the BIR.

"In practice, itís going to be a de facto exemption," the source said.

At present, the source said only about 13 percent of the countryís minimum wage earners are still covered by the tax net.

The majority of minimum wage earners no longer pay the income tax anyway since most of them had qualified deductions that ultimately exempt their net income from taxation.

From this 13 percent, the source said the government collects around P445 million every year. If the exemption is implemented, the source said the government expected to lose P400 million and collect only P45 million a year from minimum wage earners.

"Thatís a significant amount but we can easily absorb that just by tightening the collection of taxes from other sources," the source said. "But the exemption from withholding taxes should not be a long-term measure."

Ultimately, the source said Congress should enact a law that would exempt minimum wage earners from income taxation altogether rather than looking away when they do not pay their taxes due.

At present, individual income earners with no qualified tax exemptions are taxed at five percent if they are earning less than P10,000 a year. If their income is P10,000 to P30,000, they are required to pay a basic tax of P500 plus a tax rate of 10 percent of the excess over P10,000. Those earning P30,000 to P70,000 pay a base tax of P2,500 plus 15 percent of the excess over P30,000.


By Mayen Jaymalin - The growing number of nurses and other professionals working abroad pushed dollar remittances to an all-time high, the Philippine Overseas Employment Administration (POEA) reported yesterday.

POEA chief Rosalinda Baldoz said the increasing number of highly skilled overseas Filipino workers (OFWs) was the major factor in the dramatic rise in dollar remittances from abroad.

OFWs sent home a record $7.9 billion in the first nine months of the year, which is 28 percent higher than the $6.2 billion remitted during the same period last year.

Based on POEA data, sea-based workers sent home a total of $1.2 billion for the first nine months. This was 14.29 percent higher than last yearís remittance of $1.07 billion.

Land-based workers, on the other hand, who account for a majority of the estimated eight million OFWs, sent home $6.7 billion or 30 percent more than last yearís remittance of $5.1 billion.

Baldoz said the government is expecting further growth in dollar remittances in the last quarter of the year since OFWs traditionally send money to their families during the holidays.

This upward trend is expected to continue until next year as the country deploys more professional workers abroad.

MalacaŮang hailed OFWs for keeping the economy buoyant despite slower than expected growth in the countryís gross domestic product (GDP) in the third quarter.

It conceded yesterday that the lag was due to the political crisis hounding the administration but stressed this was temporary.

Press Secretary Ignacio Bunye also blamed the opposition for continuing to destabilize the government and hurting the economy and the people in the process.

"The contrast between the heroism of our workers and the negativism of the opposition is something that hurts our national pride at a time when Team Philippines is competing for excellence in every field," Bunye said.

Reports indicated that economic data for the third quarter slowed down, hobbled by a weak farm sector, higher oil prices and political uncertainty.

From January to September, GDP grew 4.6 percent, which was well below the governmentís full-year target of 5.3 percent.

But fueled by massive dollar inflows from OFWs, the peso rallied to its highest level in eight months, closing at 53.94 to the dollar on Tuesday.

Meanwhile, militant labor groups claimed that the condition of workers nationwide has not improved despite the strengthening of the peso.

Workers from various militant labor groups led by Sanlakas said they would continue to demand a P125 legislated wage hike. ó With Aurea Calica

Chief News Editor: Sol Jose Vanzi

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