Nograles to BIR: Don’t tax soldiers’ provisional allowance

Davao City first district Rep. Karlo Alexei Nograles yesterday said the Bureau of Internal Revenue (BIR) should reconsider its decision to tax the new monthly provisional allowance granted by President Aquino to military personnel and officers as a way of showing gratitude for the men and women who risk their lives everyday to protect the country and its citizens.
Nograles said the government would not lose much if the BIR waives the usual withholding tax on the provisional allowance granted by President Aquino for military and uniformed personnel (MUP).
He said the exemption would go a long way in augmenting the meager salaries of our soldiers, most of whom are in the frontlines fighting not just the insurgents but also the depression that they have to go through being away from their families.
The provisional allowance granted by President Aquino is an interim measure to supplement the total compensation of MUPs pending the passage of the pension reform measures that would rationalize their Base Pay Schedule.
Nograles was reacting to the BIR’s pronouncement that it would still impose mandatory tax on the military allowances granted by President Aquino through Executive Order 201.
He noted that since the allowance is provisional in nature, the BIR might have the option and the discretion to waive the imposition of tax for this provisional allowance granted to MUPs.
“This is a gray area because it is a provisional allowance and is nowhere within the list of remunerations that are specifically listed as either taxable or non-taxable under Republic Act 9040,” Nograles said.
Under RA 9040, which is also known as “The AFP Tax Exemption for Pay and Allowances Act of 2001,” MUPs are exempt from paying taxes for their longevity pay; mandatory allowances namely cost of Living Allowance, Personnel Economic Relief Allowance and Hazardous Allowance; Collateral Pay, namely Specialist Pay, Combat Pay, Flying Pay, Air Mechanic’s Pay, Sea Duty Pay, Hazardous Duty Pay, Instructor’s Duty Pay, Parachutist’s Pay and Hardship Pay and Collateral Allowances, namely Special Clothing Allowance, Cold Winter’s Clothing Allowance and Cold Weather Clothing Maintenance Allowance, Winter Clothing Allowance, Initial Enlistment and Reenlistment Allowance and Laundry Allowance.
MUPs are also exempt from paying taxes for their retirement benefits, pensions, death, and disability Benefits.
“The list as provided by RA 9040 specified the items that are exempt from taxes but also did not specify the list of allowances that are subject to the usual taxes. So I think that this provisional allowance can be tax exempted without any legal complication,” Nograles said.
Aside from the new set of allowances, the EO also increased the hazard pay of uniformed personnel from P290 to P390 a month. █