‘Is it now the State’s policy to exempt minimum wage earners but tax small vendors and drivers?’

Senator Pia S. Cayetano today warned the Bureau of Internal Revenue (BIR) against proceeding with its plan to tax market and sari-sari store vendors, as well as pedicab and tricycle drivers, as part of government efforts to raise additional revenues to plug the budget deficit.

“The BIR should immediately scrap its plan to tax small own-account workers who barely earn enough for their needs, and whose earnings probably fall below the minimum wage,” said Cayetano.

She noted that minimum wage earners themselves have already been exempted from paying income taxes by the government under Republic Act 9504 which was signed two years ago in June, 2008.

“Has it now become the policy of the State to exempt minimum wage earners from income taxes but include in its tax base own-account workers in the informal sector who are earning below the minimum wage? How does the BIR make sense of this?” she asked.

“Taxing these workers will only force them to stay in the underground economy, or worse, drive them deeper into poverty and unemployment.”

“Why pick on small fry when BIR can go after big-time tax evaders who bleed government coffers some P242 billion every year?”

She noted that in its last official study on tax losses, the Department of Finance (DOF) itself estimated that annual corporate tax evasion accounted for P59.3 billion, individual tax evasion P98.5 billion, and VAT leakage P69.85 billion.

“Of the country’s 38-million labor force, about one-third, or 12.1 million are own-account workers, mostly toiling in the informal sector. They include tricycle and pedicab drivers, small market and sari-sari store vendors who are probably not covered by social security and health insurance.”

“To make them more productive contributors to the economy, these workers deserve support through access to livelihood credit facilities or by encouraging them to organize into cooperatives.”

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