More than six million workers don’t have to pay income tax starting this month, thanks to the Tax Reform for Acceleration and Inclusion (TRAIN) Act, the Department of Finance said yesterday.
The DOF said the number of compensation earners with taxable income of about P685 a day or around P20,833 a month accounted for 86 percent of the total.
Under the TRAIN, compensation earners as well as self-employed individuals with an annual taxable income of P250,000 and below are now exempt from paying personal income tax.
Combined 13th-month pay and other bonuses less than P90,000 will also be tax-free.
“These TRAIN provisions will benefit clerks, call center agents earning P21,000 and below and public school teachers with the rank of Teacher I with a basic salary of P20,179 and up to Teacher III with basic pay of P22,149 starting this year,” Finance Secretary Carlos Dominguez III said.
“For those employed in the government sector, a Laboratory Technician II with a monthly pay of P16,282, a Midwife I getting P17,473 a month, and a Volunteer Service worker I receiving P18,718 a month under the third tranche this year of the Salary Standardization Law will be exempted from paying the personal income tax,” Dominguez added.
“In the private sector, a concierge in a hotel earning P18,000 a month and a food server paid P15,000 monthly are among the millions of employees who will benefit from the TRAIN’s zero personal income tax provision,” according to Dominguez.
The TRAIN since Jan. 1 this year slashed and restructured personal income tax rates that stayed the same for two decades, while also jacking up or slapping new taxes on the consumption of oil, cigarettes, sugary drinks and vehicles.
The DOF claimed that “even if one adds the impact of the other TRAIN provisions on expanding the value-added tax base, the increase in fuel excise tax and tobacco excise tax, the imposition of a tax on sugar-sweetened beverages, and the overall inflationary effect, he or she still gets to take home a net of P1,700 a month on average.”
To illustrate, the DOF said: “A public school teacher with the rank of Teacher 1 received last year a starting basic salary of P19,620 and used to take home a total of P15,197, net of the mandatory contributions. But under the TRAIN and the third tranche of the Salary Standardization Law in effect, a Teacher 1 will now get a basic salary of P20,179, which is exempt from income tax. After deducting the mandatory contributions, he/she will get to take home the full amount.” —BEN O. DE VERA