Solons’ intent in tax relief law sought

MANILA, Philippines - Faced by a barrage of opinion that coverage of the newly enacted tax relief law should have begun last January instead of July, the Finance department Wednesday said it would consult lawmakers about the intent of the measure. Finance Secretary Margarito B. Teves, in an interview, said Republic Act 9504, enacted last June 17, would be retroactive to January 1 "if that is the intent of the law." Interviewed separately by BusinessWorld, the chiefs of the ways and means committees of the House and Senate stressed the law covers the whole of 2008. RA 9504 exempted minimum wage earners from income tax as well as raised exemptions for individual taxpayers. It took effect on July 6, or 15 days after its publication in a newspaper of general circulation, but its implementing guidelines are yet to be approved by the Finance department and released by the Bureau of Internal Revenue. Prospective Both the Finance department and the tax bureau have insisted that the law covers wages only for the second half. Mr. Teves reiterated this Wednesday, even if he said he would get legislators’ opinion about the matter. "The law itself was passed middle of the year. By generally interpreting that laws should be prospective, it should apply after the law was approved," he said. He said dating the law’s coverage back to January would put pressure on the government’s revenue collections. "We will try to thresh this out and consult with members of Congress as far as this particular issue and the ramifications of it are concerned before we make a final decision," he said. He said a decision should be arrived at in two weeks. The Finance department has estimated that forgone revenues due to RA 9504 would amount to P14.25 billion, but the law’s optional standard deductions feature, targeted at professionals and self-employed individuals, should generate P15.03 billion. The tax bureau, however, has problems collecting from professionals and self-employed individuals. The Tax Management Association of the Philippines (TMAP) is pushing for coverage of tax relief for the whole year. It pointed out that the Supreme Court, in a 1992 ruling, declared that new rates of personal and additional exemptions provided by an amendatory law are applicable to income earned the year before that law took effect. Laura Victoria A.S. Yuson-Layug, TMAP president, also said the tax exemption granted to minimum wage earners and the higher personal and additional exemptions accorded to compensation earners were intended to provide relief from soaring commodity prices. Mr. Teves said that, in view of the potential billions in forgone revenues if the law were to cover wages for the whole year, "we might have to ask for additional revenues to take care of the difference or some form of staggering [sic] in the [law’s] application. But Sen. Francis G. Escudero, Senate ways and means committee chairman, said: "The decision of the Supreme Court is clear. It should apply beginning Jan. 1, 2008." Antique Rep. Exequiel B. Javier, House ways and means committee chairman, said the law "covers taxable year 2008." "The Finance department is more focused on collecting revenues rather than giving justice to the taxpayers," he added. — Ruby Anne M. Rubio, BusinessWorld