Gov’t workers to SC: Reconsider decision on tax bonuses, allowances

By: Inquirer.net August 22,2018 - 08:31 PM

Government workers on Wednesday asked the Supreme Court (SC) to reconsider its July 2018 decision that allowed the Bureau of Internal Revenue (BIR) to impose taxes on their allowances and bonuses.

Petitioners led by the Confederation for Unity Recognition and Advancement of Government Employees (Courage) led groups of government workers in filing their motion for reconsideration.

“We are already reeling from the effect of high prices caused by the TRAIN Law (Tax Reform for Acceleration and Inclusion Act), 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.” Courage national President Ferdinand Gaite told reporters.

Courage and the other government employees urged the high court to reverse its earlier decision affirming the validity of Revenue Memorandum Order (RMO) 23 issued by BIR in 2014.

The RMO imposes up to 32 percent tax on allowances, bonuses, compensations for services and other fringe benefits of government workers.

The petitioners maintained that the RMO has expanded the scope of taxable fringe benefits, which is not allowed under the National Internal Revenue Code.

The high court, in its ruling, said the BIR did not encroach the power of Congress when it issued the RMO because it is not considered as “new tax.”

The Court held that “no additional tax is imposed as the two sections merely mirror the relevant provisions of the National Internal Revenue Code (NIRC) of 1997 on withholding tax on compensation income.”

Only Section VI of the RMO was struck down by the high court. Section VI identified the governor, city and municipal mayors, barangay captains and heads of office of government agencies and government owned and controlled corporations as persons allowed to withhold and remit withholding taxes.

The high court said with Section VI, the BIR overstepped the boundaries of its authorities under the law in requiring the said officers to withhold taxes.

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TAGS: allowances, bonuses, decision, Gov’t, reconsider, SC, tax, workers

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