No more tax cuts on pay

Uhh, ok... Fine, whatever! Effective January 1, 2006, minimum wage earners in the private sector and their counterparts in government (in the Philippines) shall be exempt from the payment of witholding tax.

This was intended to be a good news and a timely gift from the beloved Philippine President, Gloria Arroyo. However, there really is nothing to rejoice about this scheme. In fact, this is merely delaying the inevitable - payment of income tax. Come to think of it, instead of enjoying refunds in case your witholding tax is actually bigger than the tax due, employees will be hard pressed to come up with the money to pay their income taxes.

With the insufficient salaries received by our minimum wage earners, many of them will find it hard to keep a portion of their salaries and save them for their income taxes. They might welcome the additional money but eventually they will have to contend with the reality that they would still need that money to pay for their income tax. It is merely staying the execution.

The President ordered the exemption "in order to mitigate the present condition of workers and the anticipated income of the R-VAT." But how will she mitigate the condition of workers when it income tax payment time?

If government really wish to help the people, it should come up with an honest to goodness progressive taxation, intensify its tax collection in heavily corrupted sectors and put up a genuine and aggressive battle against corruption.

Unfortunately, I don't believe these are in the horizon.