KMU slams BIR for tax on pension, health contributions

Labor center Kilusang Mayo Uno slammed the Bureau of Internal Revenue (BIR) for imposing taxes on contributions to pension, housing and health funds that are more than required by law, saying this is an extortion by the government and an attack on social security.

Almost two weeks ago, the BIR issued Revenue Memorandum Circular No. 53- 2011 which states that voluntary contributions to the Social Security System, Government Service Insurance System, Home Mutual Development Fund or Pag-ibig Fund and the Philippine Health Insurance Corp. (PhilHealth) are “investments” and are therefore subject to tax.

KMU clarified that contributions beyond that required by law come from increases in workers’ basic pay and that taxes on these will be collected entirely from workers’ hard-earned income.

“This is an attack on social security, on the idea that the government should be helping workers save for retirement and times of need. It is government extortion via an outright robbery of a section of workers’ wages and a cutback on social security,” said Roger Soluta, KMU secretary-general.

“The government will be able to generate money by directly taxing workers’ pay and by reducing workers’ social security as a result of reduced contributions because of the tax. This is double robbery,” he added.

“By calling additional contributions ‘investments,’ the government is trying to cover up the fact that workers and poor people are not earning over-the-ceiling wages. Workers are able to give contributions by working hard and tightening belts,” he added.

The labor center condemned the Aquino government for treating workers as milking cows on top of implementing policies that run counter to workers’ interests.

“It is simply revolting that the Aquino government is increasing its collections from workers and people but reducing funds for social services such as education, health and housing. It is not giving back to workers and people what it is taking away from us,” Soluta said.

“The Aquino government is treating workers as milking cows which it is sucking dry. It is cutting back on our social security even as it refuses to significantly increase wages, junk contractualization and control the runaway prices of basic goods and services,” he added.

“The Aquino government is not only making the future grim for workers’ children and families, it is attacking workers’ efforts to prepare for such a grim future,” he said.