AMID warnings from economists and employers that sharp increases in salaries would aggravate the inflation that workers are hurting from, the country’s largest labor group on Thursday formally filed a wage petition before the regional wage board in Metro Manila for a P320 across-the-board pay hike.
The Trade Union Congress of the Philippines (TUCP) said it reconsidered its earlier position to no longer file a new wage petition in the National Capital Region (NCR) after Socioeconomic Planning Secretary Ernesto M. Pernia issued a statement last week that a family of five would need P42,000 per month to live decently.
Pernia is concurrently director general of the National Economic and Development Authority (Neda).
TUCP Assistant General Secretary and Spokesman Vicente Camilon submitted on Thursday their three-page petition for the P320 pay hike to the Regional Tripartite Wages and Productivity Board-NCR (RTWPB-NCR).
TRAIN review, tax amnesty
The big debate over how far wages should be allowed to rise to help workers cope with record inflation raged, as calls mounted for the government to suspend implementation of the Tax Reform for Acceleration and Inclusion (TRAIN), the first part of its comprehensive tax-reform program.
Also on Thursday, Finance Secretary Carlos G. Dominguez III said the Executive was set to endorse a tax amnesty—to coincide with next April’s income-tax filings—as part of the second batch of the first-wave reforms, or “Package 1B.”
Senate leaders on Thursday pressed for a review of the TRAIN amid growing concerns over its trigger effect aggravating inflation.
This, as they also agreed with economists from advocacy group Action for Economic Reform (AER) that outright suspension of the TRAIN could do more harm than good, sharing concerns that the Duterte government should instead consider other options to tame inflation.
Senate President Vicente C. Sotto III agreed with the AER that suspending the TRAIN is anti-poor, as it aggravates inflation even more and will deprive the government of funds for safety nets like conditional-cash transfer, unconditional-cash transfer and public-utility vouchers.
“Yes, they [AER] are right,” Sotto told the BusinessMirror, voicing concern that suspending the TRAIN law “would be more detrimental than good.”
Sotto suggested that concerned administration officials do a better job of explaining the beneficial effects of the revenue measure, given observations that some quarters have been riding on the TRAIN law to mask profiteering practices, and that other factors that coincided with TRAIN’s implementation had fanned the inflation, thus making the new law a scapegoat of sorts.
Dominguez himself had candidly told Palace reporters last week that the officials underestimated the extent of the oil price rise in the world market, which took place just as the higher excise taxes on fuel, under the TRAIN, kicked in. Other sectors reliant on sugar, meanwhile, like juice makers, have reeled from rising prices of domestic sugar, just as the TRAIN mandated sugar-sweetened beverages taxes.
On Thursday Senate Minority Leader Franklin M. Drilon suggested convening a Senate oversight hearing to grill the administration’s finance officials to find out what happened.
“We must get an explanation,” Drilon told reporters at the Kapihan sa Senado media forum, recalling that the representation given by Department of Finance (DOF) officials during the Senate committee hearings on the TRAIN bill was that the revenue measure “would have little effect on inflation; that inflation would only go to the maximum 3.9 percent but it has been breached.”
Drilon wryly remarked, “Either they deceived us or they were less competent in the effects.”
He prodded Senate leaders to convene a Senate hearing to review the TRAIN law. This will allow lawmakers to get an update from DOF officials who had assured senators, when they were asked during hearings about the effect of the excise tax and the then-unenacted TRAIN on inflation, “that 3.9 [percent] is the DOF’s maximum estimate.”
“Obviously, this did not happen. The inflation in May 2018 rose to 4.6 percent,” Drilon noted.
The DOF, meanwhile, said it is eyeing to implement a tax amnesty by April next year, in time with the annual filing of income-tax returns.
Dominguez told DOF reporters the amnesty provision proposed under the Package 1B, or the other half of the TRAIN law, is being eyed for implementation by April next year.
He said it is envisioned to coincide with the 2018 filing of income-tax returns so that taxpayers who want to avail themselves of the amnesty only have to file one application.
The finance chief added that the DOF is hoping for the passage into law of Package 1B by the third quarter of this year to be able to implement the amnesty provision and other measures under the proposal by 2019.
“So most likely the amnesty will come in April, also because we don’t want the taxpayer to be filing many things: just one filing, file amnesty and income tax at the same time. Most likely [it will be] April, do it one time, I think that’s the most reasonable,” Dominguez said.
Package 1B’s contents
Under Package 1B, the government proposes: a general as well as estate amnesty, lifting of the bank-secrecy law, automatic exchange of information and increasing the motor vehicle user’s charge, as part of improving tax administration efforts.
“The House is moving quickly on it. I’d like to have it passed in the third quarter by the latest. It’s good because it will increase our revenues and basically help us in our tax administration,” he added.
According to DOF Undersecretary Karl Kendrick T. Chua, the hike in the motor vehicle user’s charge is in the technical working group (TWG) stage at the House, while the measures on amnesty, bank secrecy and the automatic exchange of information are still being discussed in separate hearings at the House and Senate committees.
In December 2017 the House of Representatives confirmed that lawmakers had vowed to pass Package 1B in the first quarter of 2018 to complete the first tranche of the administration tax-reform program.
To be known as the “amnesty package,” Rep. Dakila Carlo E. Cua of the Lone District of Quirino, chairman of the Ways and Means Committee, said Package 1B will include the estate-tax amnesty, a general tax amnesty and amendments to the bank-secrecy law.
Package 1A or the TRAIN was signed into law by President Duterte in the same month, and was implemented in January 2018. It implements a reduction on personal income-tax rates from 32 percent to 25 percent, while implementing offsetting measures to cover the revenue loss including raising excise tax rates on tobacco, automobiles and petroleum products, among others.
If approved by the RTWPB-NCR, the TUCP petition for a P320 wage hike will put the highest wage in Metro Manila to P832.
“The P832 per day wage is still a ‘survival wage’ in Metro Manila given the soaring costs of rice, fuels, sardines, school supplies, education, medical support, transportation and all other basic goods and services,” TUCP said in a statement.
TUCP cited the rising inflation rate; stagnant real wage amid the rising labor productivity from 2001 to 2016; and the country’s growing gross domestic product to justify their wage petition.
“The workers built the wealth of our nation as manifested by a 6.7-percent GDP growth rate in 2017. In the first quarter of 2018, it was 6.8 percent. This marks the 76 quarters of uninterrupted GDP growth,” TUCP said in its petition.
“A token wage adjustment at this time will just demean and further insult our people,” it added.
Camilon said they are confident the RTWPB-NCR will approve their petition after the Neda issued the “ideal” income for a family of five.
“There is already a benchmark, which we know as fair and just compensation. This is the P1,400 per day [based from Neda’s statement]. The figure came from the government. We are just ensuring the current wages will be on a par with that decent income,” Camilon said in an interview.
He issued the statement despite lack of a supervening event in Metro Manila, which will exempt its wage board from the one-year ban in issuing a new wage order.
Under the Wage Rationalization Act, RTWPBs may only issue a new wage order a year after their previous issuance unless there is a supervening event—any abnormal surge in the prices of basic goods and services for a given period.
The last wage order issued by RTWPB-NCR, which raised minimum wage rates in NCR to P475 and P512, took effect on October, 5, 2017.
In March the RTWPB-NCR—citing lack of supervening event in NCR at that time—had junked the wage petition for P175 wage increase, which was filed in the same month by the Association of Minimum Wage Earners
Camilon said they plan to file similar P320 wage hike petitions in other regions in the coming months as an alternative measure for the pending House Bill (HB) 7805 filed by TUCP Party-list Rep. Raymond Mendoza.
If passed into law, HB 7805 will increase all minimum wages nationwide by P320. Camilon said they plan to file their next P320 wage petition in Calabarzon, then in Southern Mindanao, Davao and Northern Mindanao. These were given priority as “these are the areas where we have our most active federations,” Camilon said.