MANILA, Philippines – While the Duterte administration’s proposed tax reform package seeks to increase the take-home pay of workers, labor groups are worried about the expected increase in the prices of goods that would come with it.

The House of Representatives had passed on Wednesday, May 31, its version of the tax reform package, which would exempt those earning P250,000 or below annually from paying income taxes and would reduce the maximum rate of personal income tax over time from 32% to 25%, except for high income earners.

But under the measure, there will be higher excise taxes on refined petroleum products, certain vehicles, and sugar-sweetened beverages. The excise tax on fuel is expected to drive the prices of basic commodities up.

“The impact of the proposed tax measure to workers is not uplifting because those who are already poor workers would become even poorer. This bill is a big mistake committed by congressmen who approved it,” said Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) spokesperson Allan Tanjusay.

What ALU-TUCP wants President Rodrigo Duterte to do is grant minimum wage earners a P500 cash subsidy per month to cope with the rising costs of goods. The largest labor union in the country earlier proposed this aside from the petition to increase the daily minimum wage by P184.

The Department of Labor and Employment (DOLE) has not been keen on granting a subsidy because it will cost the government P1.3 billion a month or P15 billion a year.

ALU-TUCP maintains, however, that the P500 subsidy will help minimum wage earners and informal sector workers cope with inflation.

Minimum wage earners are exempted from income tax but still vulnerable to higher costs of living. The current minimum wages – the highest is at P491 and the lowest is at P260 – set across the country are less than their real value by P80 to 120.

Workers in the informal sector, which comprise 38% of the total working population, will also be affected due to the irregular flow of income given the nature of their jobs. Jeepney drivers, ambulant vendors, domestic helpers, and other odd-job workers are part of the informal sector. (READ: FAST FACTS: What you need to know about PH’s informal sector workers) 

The Federation of Free Workers (FFW), meanwhile, said the income tax exemption should be expanded to include workers with an annual income of up to P350,000 or roughly P30,000 monthly to offset the effects of inflation.

FFW president Sonny Matula said, however, that a monthly income of P30,000 or less is still below the living wage.

The Philippine Statistics Authority (PSA) pegs the living wage at P9,064 monthly for a family of 5 while independent think tank IBON Foundation says it should be at P1,019 per day or around P20,380 monthly for 20 workdays. – Rappler.com