TUCP to gov’t: Probe wage violators for potential tax dodging

As the Aquino government frenziedly identifies measures to raise at least P325 billion to cover its expected deficit for 2010, a major labor bloc urge it to investigate firms found underpaying their workers and violating other general labor standards.

The Trade Union Congress of the Philippines (TUCP) thinks these firms are potential tax dodgers, too. It is the largest national trade union center in the Philippines, formed in 1975 with official backing of the Marcos government.

The government tax collection agency, the Bureau of Internal Revenue (BIR), should immediately audit the erring firms for possible non-payment or underpayment of their tax obligations, TUCP secretary-general and former Senator Ernesto Herrera said.

“Firms that defraud their workers of lawful wages, or deprive their staff social security protection and other statutory benefits, are several times more likely to be cheating as well in their tax payments,” Herrera pointed out.

“On the other hand, firms dutifully complying with labor standards are several times more likely to be truthfully declaring their income and responsibly paying their tax liabilities,” assumed Herrera. A former chairman of the Senate committee on labor, employment and human resources development,

Herrera made the statement as the Aquino administration steps up its drive against tax evasion parallel with its directive of better tax collection.

To complement BIR’s efforts, the Department of Finance and the Department of Justice have vowed to file at least two criminal charges every week against suspected tax dodgers and smugglers.

The Labor Department’s Bureau of Working Conditions inspects thousands of firms every year. It has discovered that up to 20 percent of them are found underpaying the minimum wage, depriving workers their 13th month salary and overtime pay, Herrera bared.

Other firms have been found cheating their employees of their extra pay for work on holidays, or unlawfully withholding their social security premiums, he added.

Besides overpricing and producing substandard goods and services at the expense of consumers, Herrera said there are only two ways by which unscrupulous firms cut corners to rake in excessive profits — by short-changing workers and cheating on taxes.

In the interest of fair play, the former senator urged the Departments of Trade and Industry and Labor and Employment to combine their forces to ensure rigorous enforcement of, and compliance with new regional minimum wage rates and other labor regulations.

“Firms that underpay their workers, or violate other labor standards compete wrongfully and unfairly with law-abiding establishments that are properly compensating their employees,” Herrera said.

“We recognize that every business is entitled to earn a reasonable profit. However, respect for basic labor rights should form part of the framework within which every business must compete freely and honorably,” Herrera stressed.

This July 1, new wage rates took effect after the Labor Department’s Regional Tripartite Wages and Productivity Boards recommended a P25 wage increase for workers in Metro Manila.

The minimum wage in the National Capital Region was pegged at P404 per day for non-agricultural workers, and P367 for workers in agriculture, private hospitals with bed capacity of 100 or less, retail/service establishments with 15 or less markers and manufacturing establishments with less than 10 workers.

Workers from Western Visayas, meanwhile, will get a P15 increase in their daily take home pay in mid-August, after the wage board in Western Visayas approved a new wage order raising the minimum wage in the region at P265 for non-agricultural establishments employing more than 10 workers.

The regional wage board also pegged at P223 the daily minimum wage rate for non-agricultural firms employing less than 10 workers and those working in agricultural plantation.

Commercial establishments were advised to comply with the minimum wage law or face appropriate sanctions. Under the law, any corporation or person who refuses to pay the prescribed adjustments in the wage rates shall be meted a maximum fine of P100,000 or a four-year jail term, or both.

Erring employers will be required to indemnify their workers an amount equivalent to twice the value of their unpaid benefits.

As in previous wage orders, a one-year exemption may be granted to certain types of establishments, such as distressed establishments, retail/service establishments regularly employing not more than 10 workers, establishments whose total assets are not more than P3 million, and establishments adversely affected by natural calamities. –Nora O. Gamolo