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By Joel R. San Juan, August 22 2018; Business Mirror
https://businessmirror.com.ph/state-workers-to-sc-restore-tax-free-perk/
Image Credit to Radio La Verdad
GOVERNMENT workers on Wednesday sought the Supreme Court’s reconsideration of its decision issued in July, which gives the Bureau of Internal Revenue (BIR) the go signal to subject their nontaxable benefits, such as allowances and bonuses, to withholding tax.
The Confederation for Unity Recognition and Advancement of Government Employees (Courage) led other government workers’ groups in filing the motion for reconsideration of the Court’s decision that affirmed the validity of Revenue Memorandum Order (RMO) 23 issued by the BIR in June 2014.
The order imposes up to 32-percent tax on allowances, bonuses, compensations for services and other fringe benefits of government workers.
Courage President Ferdinand Gaite said that the SC ruling, if not reconsidered, would adversely effect government employees.
“We are already reeling from the effect of high prices caused by the TRAIN [Tax Reform for Acceleration and Inclusion] law, oil price increase and the peso depreciation, and now this reduction on our ‘take-home pay,’ which is not even enough to take us home, will further aggravate our situation,” Gaite lamented.
Aside from Courage, the petition questioning the validity of RMO 23-2014 was joined by Judiciary Employees Association of the Philippines, Sandiganbayan Employees Association, Sandigan ng mga Empleyadong Nagkakaisa sa Adhikain ng Demokratikong Organisasyon, Association of Court of Appeals Employees, Department of Agrarian Reform Employees Association, Social Welfare Employees Association of the Philippines-Department of Social Welfare and Development, Department of Trade and Industry-Employees Union, Kapisanan Para Sa Kagalingan ng mga Kawani ng Metro Manila Development Authority, Water System Employees Response, Consolidated Union of Employees of the National Housing Authorities and the Kapisanan ng mga Manggagawa at Kawani ng Quezon Citty.
Even the members of the Supreme Court Employees Association, through its president Erwin Ocson, asked the Court to reverse its ruling, insisting that it erred when it included all fringe benefits as taxable.
The groups maintained that the assailed RMO widened the scope of taxable fringe benefits, which is not allowed under the National Internal Revenue Code (NIRC).
In its ruling last month, the Court unanimously voted to affirm the validity of Sections 3, 4 and 7 of RMO 23-2014 issued by the BIR, which classified as taxable compensation income allowances, bonuses, compensation for services granted to government employees and other benefits that have been enjoyed by government employees for some time now without any tax deductions, except for the 13th- month pay, in excess of P30,000 and the loyalty pay.
Under RMO 23-2014, which took effect on July 7, 2014, all benefits received by government employees and officials will be subjected from 30-percent to 32-percent tax.
In upholding the validity of Sections 3 and 4, the Court explained that contrary to the claim of the petitioners, there is no additional tax imposed as the sections merely mirror the relevant provisions of the NIRC of 1997 on withholding tax on compensation income.
The Court stressed that despite the fiscal autonomy being enjoyed by the Judiciary, Ombudsman and Constitutional Commission, this does not give them immunity or exemption from the paying taxes imposed under the tax code.
