BIR Eastern Visayas chief cites pros and cons of tax cut for low income workers

TACLOBAN CITY, April 13 (PNA) -- The proposal to exempt those workers earning PHP30,000 or less monthly from taxes may have negative and positive impacts, an official of the Bureau of Internal Revenue (BIR) said.

BIR Regional Director Norberto Vitug told reporters in a press briefing that although billions will be lost by the government from taxes imposed to workers, this may be replaced by a higher tax collection from the Value Added Tax (VAT) on products bought by consumers.

But VAT earnings can only be assured if consumers would ask for receipt from stores, according to Vitug. “It is possible as long as there is a law.”

“The tax cut has an advantage since it would pump prime the economy. The proponent sees the need for tax exemption so that consumers would have more purchasing power,” Vitug explained.

Around five percent of income taxes have been collected by the government to workers receiving PHP30,000 salary while government is collecting 12 percent VAT from products that workers buy from stores.

“But it is still hard to know the impact of high take home pay to business activity,” he added.

“People should think of what are the benefits of paying taxes and not only be reminded of the payment they made when they pay taxes.”

He reminded the public that taxes that the government collect are used to fund government projects and Internal Revenue Allotment (IRA) shares for local government units.

Eastern Visayas has generated PHP6.5 billion in taxes last year, a small chunk of the PHP25 billion poured by the national government to local government units in the region through IRA shares.

“That is why we need to convince people to pay their taxes so that the government can spend more for the needed projects,” Vitug said.

The official reiterated that increase in tax collection can be achieved by ensuring that business operates legally and people are paying taxes correctly. (PNA)

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