BUWIS SERYE #2: SINGLE PARENT MARILEN

Marilen Reyes, 30 years old, is a single mother to her 10-year old daughter, Sheila.  She got married right after college to her high school sweetheart, Ben, but after 5 years of marriage, she discovered that Ben was having an affair with another woman.  Though she tried to work it out with him, Ben decided to leave her and her daughter.   At the start, he was sending some money regularly for Sheila’s schooling but, lately, his financial support has stopped.

It is a good thing that Marilen has been a working mother from the start of their marriage. She was able to save some money when they were still a double-income family but, ever since she became a single parent, finances became tight, especially during enrollment time. It is then a blessing for her to belong to a company which provides for interest-free education loan for dependents. However, she is quite anxious about the future when Sheila goes to college.  

Marilen currently works for one of the top Business Process Outsourcing (BPO) firms in the country as a business performance analyst.  She has a monthly salary of P50,000 and with this, she earns an annual income of P700,000, broken down as follows:

Annual salary       P600,000

Bonuses                 100,000

Total                     P700,000

She has heard about the tax reform issue from a young team mate of hers, Kiko.  He has a college buddy, JAL, who shared with him a template for computing the amount of over-collected taxes from his annual salary.  Kiko then shared the template with the rest of his team mates, including Marilen. 

Using the template from Kiko, this is what she came up with:

She noted that, under the current tax system, her Effective Tax Rate (ETR) is 26%.  This means that a little more than ¼ of her pay goes to taxes!  

Based also on the template, had the tax brackets been adjusted from their 1997 level, her ETR should just be 20% -- which means a huge tax savings of 6%, equivalent to P30,410 per year.  How she wished that the amount of over-collected taxes could have gone instead to a college fund for Sheila!

That is why when Kiko shared with their team the #BlackPaydayFriday protest last October 30, she did not hesitate to wear black that day in work and joined her team mates for a groufie while holding #TaxReformNow signs. By joining that protest, her one big hope is that she will be able to put aside more of her take-home pay for Sheila’s future, rather than simply overpaying for taxes to a Government which never really gave much support to single parents, like her.  

May magagawa kayang pagbabago sa tax system ang Gobyerno para sa mga single parent katulad ni Marilen?

Abangan!  

BUWIS SERYE #1: SINGLE YOUNG PROFESSIONAL JAL

Jose Anton Luna, or JAL to friends, is a 23-year old employee in a telco company.  After finishing a management course in college 2 years ago, he started working with the company as a Financial Analyst.  He is single and lives with his parents in Bulacan, where he commutes daily to and from work. 

He loves going out with friends from time to time but, is also a prudent in spending his hard-earned money.  He wants to save and invest some of it in mutual funds but, is finding it hard.  His net take-home pay is barely enough for his daily food and transportation costs. He also gives part of it to his mom to contribute to expenses at home.

His current fixed monthly basic salary is P17,500 and with this, he earns an annual income of P295,000, broken down as follows:

Annual salary     P210,000

Bonuses                 35,000

Overtime pay          50,000

Total                   P295,000

He has read about the proposed tax reforms in Congress and wondered to himself –

“How will the proposed updating of tax brackets to inflation impact his net take home pay?”

So, he decided to use his financial analytical skills to find out.  This is what he came up with:

He calculated his tax and noted that he is taxed at the 4^th bracket level with an effective tax rate (ETR) of 19%.  That is quite high for a young working professional like him! He knows that, in Singapore, the highest tax rate is just 17%.

Since the tax brackets are not adjusted to inflation, he worked back his pay to 1997 level and was shocked to find out that he should have been taxed only at the 3^rd bracket level with an ETR of 14%!  Applying the same level with adjusted bracket values to his current pay, he calculated that he is overtaxed by 5% or by P10,050 annually!

Wow! He could have already invested that amount in mutual funds!  Since he has been working for 2 years now, that would have been easily P20,100 in savings plus interest.  

With this, he realized the importance of the tax reform issue and decided to support the #TaxReformNow cause.  Last October 30, 2015, he joined the #BlackPaydayFriday protest by wearing black at work and posting a picture of himself in his Instagram account. He really would like to see Congress, coming back from its recess, to #PassTaxReformNow.  

Now he eagerly waits for Congress leaders to talk with the President on Monday, October 9, to finally convince him to change his mind in supporting tax reform, even just the proposed updating of tax brackets to inflation. He does not see any reason why such a measure should not be passed. It is but right to correct what is inherently wrong and unjust in the tax system for the past 19 years. What further study does the DOF need to fully understand that?

And if the Government fails to do something about it in this term, he knows as a duly-registered voter, who even took a day off his work for COMELEC biometrics,  that this will be an important election issue for him come 2016.

Papakinggan na kaya ng Gobyerno ang hinaing ng mga single young professionals gaya ni JAL? 

Abangan! 

WATCH OUT FOR "BUWIS SERYE!"

To realize the impact of unadjusted tax brackets for the last 19 years, Tax for Every Juan will run a "Buwis Serye" starting tomorrow, November 3, 2015, to highlight the amount of taxes "over-collected" from taxpayers through the years.  

The start of "Buwis Serye" will coincide with the opening of Congress, coming from its recess. 

For this series, REAL stories of salaried workers (although with fictitious names for confidentiality purposes) will be featured. The series will share their present work and family circumstances,  the amount taxes they pay under the current system, and the amount of taxes over-collected from them because of the Government's failure adjust the tax brackets with inflation. 

This series aims to show actual victims of "Bracket Creep" and, hopefully, this can help seek justice for them.  Our hope is for the Government come to see people for who they are and not merely as taxpayer statistics in the current tax collection system. 

With this, Tax for Every Juan joins the call for President Aquino and legislators to immediately act on pending tax reform proposals in Congress, particularly the indexation of tax brackets to inflation. 

This tax reform measure clearly does NOT require any further study. It simply requires our Government to give back to taxpayers what it has unduly collected from them by way of higher taxes through inflation for the past 19 years. 

Regardless of the estimated loss of revenues from this proposal, this measure should NOT also bear any cost on the part of Government. This is because taxpayers have borne for the longest time the burden of higher taxes and, consequently, lower take-home pay.

NOW is the time to give back to taxpayers what rightfully belongs to them. Ngayon ang #TamangPanahon para sa Tax Reform.

So, to the President and our Legislators -- Time to #PassTaxReformNow! 

P.S. - If you would like to have your story featured in the "Buwis Serye," 

please send a pm through our Facebook page 

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or post a message in this blog post. 

We'll get in touch with you for the details. Thank you.