TUCP insists OFWs should be exempted from stamp tax

MANILA, Philippines – A labor group has scored the Department of Finance (DOF) for asking President Arroyo to veto a provision in the proposed new Migrant Workers Act that exempts overseas Filipino workers’ remittances from the documentary stamp tax (DST).

“Malacañang should reject outright the DOF’s foolish and contemptible request,” said Trade Union Congress of the Philippines (TUCP) secretary-general Ernesto Herrera.

Herrera, former chairman of the Senate committee on labor, employment and human resources development, has been pushing for the abolition of the DST on remittances, which, he said, has been a burden to OFWs and their families at home.

A provision in the proposed new Migrant Workers Act, ratified by both the Senate and the House on January 18, excludes money sent home by OFWs from the DST.

At present, the Tax Code provides that all money transfers from abroad and payable in the Philippines, including those wired home by OFWs, would be subject to the DST at a rate of P0.30 for every P200.

This means that OFWs pay P34.60 for every $500 or P23,065 (at $1:P46.13) that they send home. This is on top of the usual foreign and local bank fees, plus the P0.50 to a dollar margin that domestic banks are allowed when they pay out the remittance in pesos.

According to Herrera, the Bureau of Internal Revenue (BIR) was able to collect at least P1.2 billion on the $17.348 billion sent home by OFWs in 2009.

“This year, assuming annual remittances grow by 10% to $19 billion, the BIR will be raking in another P1.3 billion in DST from OFWs,” Herrera said.

“This question really is, whether the P1.2 billion or P1.3 billion is better kept in the government’s pocket, or in the pockets of the families here of our OFWs. We say abolish the DST on the money transfers made by our OFWs, and let their families here keep the extra cash for them to spend,” Herrera added.

Earlier, the DOF asked the President to veto the provision exempting OFWs from the DST, saying this would result in a revenue loss of P1 billion per year for the government.

The government has been trying to shore up its revenue collection to plug the country’s widening budget deficit, which hit a record high of P298.5 billion in 2009. –abs-cbnNEWS.com