DOF: Higher pay also awaits above minimum wage earners

If passed by Congress, the first package in the Department of Finance’s (DOF) tax policy reform program would allow an entry-level employee earning a little above the minimum wage to take home almost a month’s worth of salary.

In a statement Tuesday, Finance Undersecretary Karl Kendrick T. Chua said entry-level workers earning about P13,378 per month “would see an increase in their take-home pay by around P12,673 per year” under the proposal to reduce their personal income tax to zero.

In the case of employees in the booming business process outsourcing sector, Chua said those who earn P21,000 per month who, for example, have at least four dependents and currently paying P9,202 in income tax “will only have to pay around P1,567 per annum because of the proposed restructuring of the tax brackets.”

“Right now, some minimum wage earners admit not wanting to move beyond the minimum wage for fear of losing their income tax exemption so they would rather remain in the low income bracket and enjoy the exemption,” he said.

He added even nonminimum wage earners may become tax-exempt.

According to Chua, “4.7 million Filipinos earning P250,000 or less per year, which represent 83 percent of the current tax base for individual taxpayers, would be exempted from paying income taxes under the DOF tax reform plan.”

“This figure already includes some 1.7 million minimum wage earners who are currently exempted from paying taxes, which means the remaining three million taxpayers earning above the minimum wage but not over P250,000 per year would automatically increase their take home pay by paying less taxes,” he said.