Thursday, July 07, 2011
Why BIR is wrong?
Yesterday,July 6, 2011, The Philippines Bureau of Internal Revenue issued a memorandum circular no. 27-2011 saying that only mandatory contributions of SSS, GSIS and Pag-IBIG Fubd are exempted from income and witholding tax. Any contributions above the compulsory amount cannot be excluded from the gross income of taxpayers and are therefore subject to tax.
Filipino investors who are members of Pag-IBIG Fund are required to contribute as an employee a maximum of 2% of their monthly compensation. Majority of Pag-IBIG Fund members are lower class and middle class who aspire that their Pag-IBIG savings will help them save for their retirement.
With the 2% contribution, a typical member of Pag-IBIG can have around P200,000 after 20 years of savings. Since P200,000 is not enough when you retire, Pag-IBIG Fund offers a scheme called Pag-IBIG II wherein members, whose gross monthly income exceeds P5,000.00 would have another savings option that would provide them with a yield higher than those given under their existing membership with the Fund.
A minimum P500 monthly contributions can be made. The scheme will help the members to accumulate additional fund for their retirement.
This is the additional contribution the BIR want to tax.
It is understood that the state needs money for its operation but the state exists because of the people who are paying religiously their taxes. If the state can not help the people in terms of assistance in their retirement years then the state should help the people who want to save by providing incentive such as exemption of tax for the Pag-IBIG II contribution.
The BIR should tax more those who spend not those who will save.
The BIR should repeal their