Overseas Filipino Workers object strongly to taxation plan
By Julie Javellana-Santos
OFW Journalism Consortium
An Arroyo administration proposal to tax overseas Filipino workers has stirred criticism from overseas Filipino workers and migrants from all over.
Instead of taxing overseas Filipino workers (OFWs), “the government should be more creative and resourceful to tap the enormous potential that OFWs have to offer,” said Miguel Bolos, a telecommunications engineer who has been in Saudi Arabia for almost as long as the overseas employment program.
“We are damned if we do and damned if we don’t,” he wrote to an egroup on migrants’ issues. “Considering the fiscal crisis that the country is facing, it would appear very unpatriotic for the overseas Filipinos to just say no to taxing the Overseas Filipinos anew especially if the situation is indeed dire.”
The proposal to tax OFWs, which was first broached by Assistant BIR Commissioner KimLokin last April again surfaced in September, this time via Finance Secretary Juanita Amatong in an interview with the Philippine Daily Inquirer on Sept. 9.
Alternative proposal to increase revenues.
Amatong told the Inquirer it is time for everyone to share the fiscal burden. “They (OFWs) are Filipinos, therefore they have to help in efforts to ease the country’s fiscal problem.”
She said the DOF is studying a proposal to restore the gross income tax on OFWs, as an alternative in case Congress fails to pass the main revenue-enhancement measures proposed by the executive department to ease the budget deficit.
“We don’t know how many of our tax measures will be approved, so we have to look for alternatives,” Amatong said.
Before the Comprehensive Tax Reform Program was implemented in 1997, Filipinos working abroad, considered modern-day heroes for remitting the much-needed dollars to the country, used to pay a 2-percent gross income tax. However, the amendments to the old tax law have since exempted them from paying taxes.
Bolos said, “It took a long time and a lot of effort to get the tax exemption for the Overseas Filipinos passed and will probably remain even if the fiscal crisis situation comes to pass in the future. It is not that the Overseas Filipinos are not doing their part to alleviate the crisis, they are doing a lot. They are not just high-profile and clearly visible.”
“We are looking at this area to increase our revenues,” Amatong told the Inquirer, adding, “I’ve consulted with many of our ambassadors and even some overseas workers. They told me they don’t mind paying taxes.”
Amatong said the DOF would look into how much revenues were generated from OFW taxes before 1997 to estimate how much the government could collect should the gross income tax be re-imposed.
She said the possible tax collection from OFWs could be substantial for the government but not burdensome for OFWs. She also said the DOF study would help determine whether it would adjust or retain the 2-percent tax rate if the plan is ultimately implemented.
Voices from Saudi
Manuel Amora, a community leader in Riyadh, warned that the idea could backfire on the Philippine economy.
“They must be careful in making such proposals because it is an insult and it could scare us into withholding our remittances,” he said. “Blaming the low income tax collections on OFWs is a nonsense statement. Why not check and go after those multi-million peso companies in the Philippines who continue to evade paying their taxes?”
Hernan Obenita, a secretary at a mining company in Saudi Arabia, suspected that the government may be getting desperate because it may have used much of the government’s money for electioneering.
“Tiga-sagip o taga-takip ba ang mga OFWs ng mga gago sa gobyerno para huwag silang mapulaan sa kanilang mga tiwaling gawain (Are we again being made to make up for the irregularities committed by these fools in government)?” he asked.
Alex Asuncion, a Bagong Bayani awardee, also wondered why President Arroyo’s administration is trying to take back what was given to OFWs by the Ramos administration.
“Kaya nga inalis na yan sa atin dahil malaki na ang naitutulong natin sa pamamagitan ng ating remittances (That iswhy that burden was removed from us because we are already helping our country a lot through our remittances),” he said.
Most OFWs can’t afford to pay taxes
Grace Lardizabal, a domestic helper in Alkhobar, told the Saudi Arabian Arab News newspaper she is worried that nothing would be left of her meager pay should the tax be re-imposed.
“Ano pa ang matitira sa suweldo kong SR (Saudi Rial) 600 (about P5,000)? Hindi pa nga sapat ang pinapadala ko sa amin (What will be left of my SR600 monthly pay? I’m not even ending enough money home),” she said.
Virgilio de Jesus, a warehouseman at Rashid-Abetong, told the Arab News he receives a monthly basic salary of only SR1,200 a month (roughly P11,000), and his children and grandchildren are staying in his house.
“If I have to pay income tax it would be impossible for me to meet the requirements of my family, who totally depend on me,” he said.
Rudy Dianalan, chairman of the Kasapi Congress, which played a key role in lobbying for the abolition of the income tax on OFWs said in Arab News: “It’s unfair to us OFWs because we are earning our income outside our country not in the Philippines and we are not using government services. We are actually helping the economy through every dollar we send home to our families.”
Bioux Manilum, Bisaya president and Riyadh chapter commander of the Order of the Knights of Rizal (OKOR), added that his group members are against the tax.
Run after big tax evaders
Daphne Ceniza, a Filipino community leader in Hong Kong, said, “The huge fiscal deficit is mostly caused by the huge debt servicing fees we have to pay because of the government’s reckless borrowing without prudent management of our funds. OFWs do not have any idea how these funds were spent, they have not seen where these monies went and now the government is asking them to help pay up.”
She added, “The government’s failure to run after big tax evaders makes it more scandalous for them to impose tax on the people who have to shed blood, sweat and tears just for their families to survive. This insensitivity of the government to the feelings of OFWs demonstrate their lack of understanding on the issues confronting OFWs. The OFWs already paid their dues the moment they decided to risk the family unit by going abroad to support their families. Why add more to their load?”
Where are the benefits?
Edna Aquino, a Filipino community leader who runs the Center for Filipinos in the United Kingdom, said perhaps OFWs would not mind being taxed so much if they or their families received corresponding benefits.
“Pagkatapos manirahan sa UK nang mahabang panahon, nakikita ko ang kahalagahan ng taxation bilang isang instrumento ng pagmimintina ng civil society. Lalo’t kung ang lipunan ay iyong tinatawag na ‘welfare state’ katulad nang UK: libre ang medical services, edukasyon – libre lahat. (After having lived in the UK for a long time, I seethe value of taxation as an instrument for maintaining civil services, especially since it’s a ‘welfare state’ where everything medical services and education, is free)”
She said, “Hindi ako nanghihinayang sa buwis na binabayad ko (30 to 35% of my gross income) kinakaltas automatically sa sweldo (I mind paying taxes (30 to 35% of my gross income). This is automatically deducted from my pay).”
Absentee voting and taxation
Switzerland-based Cej Jimenez of the Geneva Forum for Philippine Concerns pointed out that overseas absentee voting should by no means be linked to taxation.
“The link between taxation and representation is not organic nor immutable,” Jimenez said explaining that one didn’t necessarily follow the other. “Many countries, including Switzerland, exempt their overseas nationals from income taxation but they retain their right to vote through their embassies or by post.”
She added, “Both voting laws and tax laws are separate and distinct aspects of citizenship. However, there is a difference: voting, including overseas voting for us who are abroad, is a consequence of the human right of citizens to political participation, enshrined in our very own Philippine constitution! Taxation, on the other hand, is a consequence of government functions with regard to its citizens as well as foreign residents.”
Are OFWs an easy target?
“This will be a problem for certain migrant workers here in the US, e.g. nurses and other professionals. They pay taxes to the US government,” said Ria, a nurse in Washington DC.
”I am not an expert on the tax system. But I think one of the issues is a tax system that is fair and equitable for all. I also do not know why the Philippine government should rescind the original policy. Will it really have an impact? Will it be sustainable? Or is this a knee-jerk reaction and OFWs an easy target?”
Linda Abad, who cleans apartments for a living, told Fil-Am newspaper Philippine News, “It will make the life of domestic workers more difficult. Nothing will be left from my salary.”
“Taxing the overseas workers is like extortion. They [OFWs] paid a lot before they could leave the Philippines and work abroad. The workers paid the Philippine Overseas and Employment Agency and Overseas Workers Welfare Administration Association, aside from other taxes.”
Ana Liza Caballes, board member of Damayan, the biggest advocacy group for Filipino domestic workers in the New York area, expressed in Philippine News her strong opposition to the reported plan.
She recalled that in the late ‘90s, when OFWs were still required to pay taxes to the Philippine government, workers in Canada mounted a protest action against the tax burden, and eventually won the exemption with the implementation of Comprehensive Tax Reform Program in 1997.
Warehouse worker Jun Rodriguez, said, “My income is not enough to support my three children. For one thing, I only earn minimum wage ($5.15 an hour). I won’t be able to pay taxes to the Philippine government. I’m struggling to pay a lot of bills. Life is difficult here in the US.”
Other Filipinos say okay
But other Filipinos polled by Philippine News said the proposed taxation is okay.
Tessa Rubio, who has been working as a nurse in New Jersey for 12 years, said she wouldn’t mind paying a small tax to the Philippine government if it will uplift the lives of disadvantaged Filipinos in her homeland. Rubio earns $60,000 a year.
Another high-income Filipino-American agrees with the plan. “I feel you have an obligation to give back to the Philippines. If you have money to share, then it’s okay to pay taxes to the Philippine government,” said Dr. Mel Lister, a general practitioner for the last 15 years who has been donating to charitable groups in the Philippines to feed and educate Filipino orphans. She declined to give her income, but physicians in the NY area earn an average of $120,000 a year.
“For me, it’s 50-50. We have a responsibility to help the Philippine economy. However, I’m reluctant to pay taxes in the Philippines because of massive corruption. You don’t know where your money would go. We sacrifice a lot and work hard to earn a living here, but our money might only go to corruption,” said Lilian Rabanera, a nanny in Manhattan.
Tax exemption for low-income earners?
The Bureau of Internal Revenue earlier proposed that only professionals and other OFWs with high-paying jobs would be taxed and low-income earners such as domestic helpers could avail of tax exemptions..
But Bolos countered, “Considering that about 90 percent of OFWs would fall under the category of low-income earners and are thus tax-exempt, not much will be achieved by the proposal to tax them.”
Instead, he said, it would only “expose them once again to abuse and fleecing by unscrupulous tax officials and embassy staff in their place of work” which was the practice in the past before the OFWs tax exemption was granted.
Bolos said what the government should do is to make sure that tax payments are not diverted to the private accounts of some crooks in the department, and go after the smugglers who are depriving the government of substantial amounts of tax revenues.
Migrante International said Filipinos abroad are not to blame for the fiscal crisis and poor tax collection.
“President Gloria Macapagal-Arroyo is courting the ire of overseas Filipinos by pushing OFWs to pay taxes despite the absence of adequate government services and protection here and abroad. This administration is propagating a big lie by indirectly blaming us for the fiscal crisis and poor tax collection in advocating for taxes on OFWs,” Migrante Sectoral Party Chairperson Connie Bragas-Regalado said.
Migrante said that, “The annual remittances of overseas Filipinos are more than the combined value of the top five merchandise exports in 2003. The $7.639 billion (roughly P4.2 billion) remitted last year is also almost 100 times the figures of foreign direct investments, almost half the Gross Domestic Product and one-fourth (1/4) of the Gross National Product in 2003.”
“Both the dollar remittances and government fees on OFWs help keep the economy afloat. How can this administration even think that ‘OFWs are not helping the country Bragas-Regalado said.