Salaried Workers Carry Burden of Taxes

Citing data from the National Tax Research Center (NTRC), Finance Secretary Isidro Camacho said that in the year 2001, there were 2,605,505 individual taxpayers who filed their income tax returns and paid a total of P80.42 billion.

About 2,079,745 salaried workers, or 80 percent of the income tax payers, paid a total of P66.3 billion in income taxes, accounting for 82 percent of the total collection. Professionals or self-employed individuals contributed only P10.75 billion or only 13 percent of the income taxes while capital gains tax paid by individuals reached P3.18 billion.

In particular, self-employed individuals or single-proprietors paid P10.13 billion while professionals paid only P620 million. Based on these figures in 2001, professionals paid only P20,447 in income tax while salaried workers paid P31,879.

According to the DOF, this should not be the case since professionals are actually earning much higher than salaried workers. Citing a 1997 government survey, the DOF said that salaried workers earned only P582.7 billion while professionals received P1.159 billion during that year. Measured per capita, salaried workers earned an average of P223,642 while professionals earned P2.204 million in 1997.

In the year 2002, for example, only 2.8 million Filipinos of the total 30 million workers, businessmen and professionals paid their income taxes. As of October 2002, there were over 30 million Filipinos in the labor force, about 15 million of whom were salaried workers, 11 million were self-employed and 4 million were unpaid family workers.

One government study showed that over the past 11 years (1991 to 2001), leakage from the individual income tax amounted to P608 billion. This was on top of the P610 billion that were lost to leakage in the value added tax (VAT) scheme.