MANILA, MAY 3, 2007 (STAR) Malacañang defended President Arroyo yesterday against accusations that she used the wage issue to campaign for Team Unity senatorial bets, saying that there was nothing illegal about her actions.

Executive Secretary Eduardo Ermita said in his weekly press briefing at Malacañang that the President merely wanted to ensure a smooth relationship between the two chambers of Congress and the Executive branch, particularly regarding the passage of important pieces of legislation.

Ermita was responding to the claims of the President’s critics that the promise made by Mrs. Arroyo to have Congress pass a bill exempting minimum wage earners from paying income taxes was blatant vote-buying and, as such, should be considered a violation of the country’s election laws.

Before a gathering of thousands of members of various labor groups at the Folk Arts Theater on Labor Day, the President said that a win by Team Unity bets will result in a commitment to pass the law on minimum wage income tax exemption.

"The President is saying that we should have cooperation in Congress," Ermita said.

Malacañang and the administration-dominated House of Representatives have blamed the Senate on numerous occasions for sitting on several bills backed by the President.

One such bill is House Bill 5296 which provides tax breaks for low- and middle-income groups, which was passed in the House but was not acted upon by the Senate.

Besides exempting minimum wage earners from paying income taxes, the proposed bill also intends to lower the income tax rate for middle-income earners.

Other salient features of the proposed bill are to increase by 50 percent the amount of personal exemptions; reduce the tax gap or leakage of individual taxation by adopting the Simplified Net Income Taxation Scheme or SNITS for individuals engaged in trade business; raising the optional standard deduction rate for professionals and self-employed individuals from the current 10 percent to 40 percent.

According to the authors of the bill, the expected incremental revenue from the SNITS will balance off the revenue implication of the restructured income tax rates.

Ermita said that there is still a chance for the bill to be passed in the 13th Congress when it resumes session in June, if the Senate decides to consider the bill.

Meanwhile, senatorial candidates of the Genuine Opposition and Team Unity crossed party lines in supporting President Arroyo’s call for tax breaks for minimum wage earners to improve their state of living.

Senate President Manuel Villar Jr. said minimum-wage earners should be given a tax break by being required to pay only P1 a year as withholding tax to alleviate their economic woes.

Villar is both an independent and guest candidate of GO.

Team Unity senatorial candidate Sen. Ralph Recto reminded the public that the tax-break bill has long been pending in Congress. Recto, who sponsored the measure, recommends that a combined income of a husband and wife amounting to P288,000 each year should be exempted from taxation.

GO senatorial candidate Francis Escudero had also expressed support for the President’s call for the next Congress to pass the tax-break measure. – Marvin Sy, Christina Mendez, Mayen Jaymalin

Chief News Editor: Sol Jose Vanzi

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