Senators warn BIR vs taxing the poor

Published by rudy Date posted on July 25, 2010

MANILA, Philippines –  Sen. Pia Cayetano warned the Bureau of Internal Revenue (BIR) yesterday of the repercussions of its plan to tax market and sari-sari store vendors, as well as pedicab and tricycle drivers, saying the revenue agency should focus instead on big tax evaders if it’s really serious about plugging the yawning deficit.

“The BIR should immediately scrap its plan to tax small own-account workers who barely earn enough for their needs, and whose earnings probably fall below the minimum wage,” Cayetano said.

“Has it now become the policy of the State to exempt minimum wage earners from income taxes but include in its tax base own-account workers in the informal sector who are earning below the minimum wage? How does the BIR make sense of this?” she asked.

Minimum wage earners are exempted from paying income taxes under Republic Act 9504 signed in June 2008.

“Taxing these workers will only force them to stay in the underground economy, or worse, drive them deeper into poverty and unemployment,” Cayetano said.

Cayetano said the BIR should go after big-time tax evaders who bleed the government of P242 billion every year.

“Of the country’s 38 million labor force, about one-third or 12.1 million are own-account workers, mostly toiling in the informal sector. They include tricycle and pedicab drivers, small market and sari-sari store vendors who are probably not covered by social security and health insurance,” she said.

“To make them more productive contributors to the economy, these workers deserve support through access to livelihood credit facilities or by encouraging them to organize into cooperatives,” she said.

Meanwhile, Sen. Ralph Recto also cautioned the BIR against rushing its imposition of 12 percent Value Added Tax (VAT) on tollway operations without first confirming its legal basis.

Recto said the BIR must seek clarification from the original framers of the law if it was really their intention to impose VAT on tollway operations.

“But during the deliberations of the measure, the imposition of VAT on tollway operations was never discussed because it was never the intention of the framers of RA 9337 to impose VAT on tollway operations,” he said.

Recto added that imposing VAT on toll fees after so many years of procrastination might be misconstrued as a new tax imposition.

“Motorists, especially those using the SLEX (South Luzon Expressway), are in for a double whammy since the imposition VAT on toll fee next month coincides with the start of the 250-percent increase in the toll rates in SLEX,” Recto said.  –-Christina Mendez (The Philippine Star) with Iris Gonzales

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