Press Release
May 18, 2009


Minimum wage earners are entitled to full income tax exemptions beginning the taxable year 2008, Liberal President Senator Mar Roxas has reiterated before the Supreme Court in connection with his petition seeking the correct interpretation and implementation of Republic Act No. 9504.

"Kailangang tuparin ng gobyerno ang responsibilidad nitong gawing maayos at maginhawa ang buhay ng bawat Pilipino," said the principal author of the law, which exempts a minimum wage earner's salary, holiday pay, overtime pay, nigh shift differential pay and hazard pay from income tax.

"Dapat ibigay sa mga manggagawa ang mga karapat-dapat na para sa kanila. Hirap na hirap na ang ating mga kababayan. Ang karampot na perang matitipid nila mula sa tax exemption na ito ay malaking bagay na para sa kanilang mga pamilya," he added.

In his Reply to the Consolidated Comment submitted by the Department of Finance on his petition seeking the high court's help in the correct implementation of the law, Roxas insisted that "the legislative intent (of RA 9504) is to make the tax benefits and relief applicable to the entire taxable income in 2008."

This, he argued, was evident by the absence of a provision in the law that specifies that the tax relief will be applicable only beginning July 2008.

He also cited the court's ruling in the Umali vs Estanislao case, where magistrates ruled that Republic Act 7167 should be applied for the taxable year 1991 even if the law that increased personal exemptions became effective only on January 1992.

The DOF, through the Bureau of Internal Revenue, had contended before the high court that tax exemptions granted to minimum wage earners cover only half of 2008, or only beginning from July when the law became effective. Its position was embodied in Revenue Regulation No. 10-2008), the approved implementing rules and regulations of RA 9504.

But the Visayan senator insisted that, "section 7 of RR No. 10-2008, which makes the tax benefits and relief under RA 9504 applicable only from July 06, 2008 onwards is null and void for being violative of the Honorable Court's ruling in Umali vs Estanislao, supra, and for being contrary to the clear legislative intent of making it applicable to the entire taxable income for 2008."

Also, Roxas argued before the SC that the DOF abused its discretion when it made its own definition and imposed conditions on who are entitled to the tax exemptions granted by the law.

"RA 9504 cannot be any clearer in its definition of a minimum wage earner and it cannot state more explicitly that the income of these minimum wage earners are to be exempted from income tax. The law made no qualifications or conditions on its definition of minimum wage earners," he stressed.

He added: "Respondent BIR, as implementing agency, is only tasked with acting within the confines of the law it is to interpret. It cannot go beyond the specific letter of the law, particularly the definition of a MWE...what was meant to included in the law granting exemption cannot respectfully be excluded by a mere Revenue Regulation. Otherwise, the revenue regulation is void..."

Roxas also said the DOF "gravely abused their discretion in issuing RR No. 10-2008 when they included provisions not otherwise mandated by RA 9504."

He reiterated his appeal for the SC to issue a writ of certiorari to nullify the conditions imposed by RR No. 10-2008 and a writ of mandamus to compel the DOF to implement RA 9504 on a full year basis starting from January 1, 2008 onwards.

"Hindi na kakayanin pa ng mga minimum wage earners na kaltasan pa sila ng buwis tulad ng ibang manggagawa na sumasahod ng malaki. Tulungan natin sila," he said.

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