Instead of Legislated Wage Increase; Business Sector Suggests Tax Exemptions

Manila Bulletin, January 4, 2007 | Go to article overview

Instead of Legislated Wage Increase; Business Sector Suggests Tax Exemptions


Byline: BERNIE CAHILES-MAGKILAT

Industry leaders and the management sector said the government should rather exempt workers from paying income taxes instead of pushing for a legislated wage hike as this would have trigger dire consequences on the local economy that is poised for take off.

Separate statements were issued by the Employers Confederation of the Philippines (ECOP), the Federation of Filipino-Chinese Chamber of Commerce and Industry (FFCCI) and the Federation of Philippine Industries (FPI) strongly objecting the P125 across the board legislated wage hike under House Bill No. 345, which the Lower House passed on its third and final reading.

ECoP president Sergio Ortiz-Luis has urged the Senate to junk the House-approved bill and for the Senate to adopt a hands-off policy on the wage issue.

"Should lawmakers insist on a legislated wage increase, more and more businesses would have no choice but to go underground," Ortiz-Luis warned.

ECoP, an association of the country's biggest employers, even ruled out any compromise on the matter of a legislated wage hike saying the economy is reeling from fierce global competition and harsh domestic challenges.

"An across-the-board legislated wage increase undermines the viability of most enterprises in the country, particularly the small and medium enterprises (SMEs) that are providing jobs and livelihood to millions of Filipinos," Ortiz-Luis asserted.

FFCCI president Francis Chua said that instead of a legislated wage hike the government should rather exempt daily wage earners from paying the income tax or further raise the threshold for exemption.

"The government should give up the 10 percent withholding tax because workers are also hit by the additional two percent value added tax. Removing the individual income tax would translate to big savings to workers," Chua stressed.

Chua argued that is better alternative to help augment the earnings of workers than increasing the daily wage rate, which would only make the country less competitive.

"Workers may be getting higher daily wage but the increase would just go to tax payments so whatever increase in salary would just amount to nothing," he said.

Chua said that waiving the income tax payments for the ordinary workers comes at a more opportune time when the government is experiencing strong revenue stream.

FPI president Jesus Arranza, on the other hand, called for the strengthening of RA 6727, which created the National Wages and Productivity Council and the Regional Tripartite Wages and Productivity Boards in their task of providing just wages across the country. …

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