News : Workers Back Proposal to Exempt OT, Graveyard Pay from Taxes
July 7, 2014 -- A bill seeking to exempt graveyard and overtime pay from taxes has gained the support of business process outsourcing companies and employees in Cebu.
Inter Call Center Association of Workers- Cebu (ICCAW), the Cebu Educational Development Foundation for Information Technology (CEDF-IT), and Qualfon Philippines Inc expressed yesterday their support for House Bills 2836 and 4682.
The two house bills of House Deputy Majority Leader and Makati City Rep. Mar-Len Abigail Binay propose that "all overtime and graveyard shift wages be expressly excluded from the computation of the gross taxable income of all workers, regardless of their hourly pay rate."
With the BPO industry identified to greatly benefit from the bills, ICCAW vice president for external affairs Sylvio Dorig, who represents 920 call center agents in Cebu, said he is grateful that tax incentives are being raised in Congress alongside with the pending Magna Carta for Call Center Workers, which was proposed by Sen. Miriam Defensor-Santiago in July last year.
"Working in a call center is a tedious job and we are grateful that this was raised in Congress," Dorig said.
However, he suggested that it would be better if call center agents who earn below P25,000 be given a tax break for two months.
Call center agents in Cebu have salaries ranging from P12,000 to P26,000 for regular employees, said Qualfon manager Joslyn Canon.
Most of the BPO employees, according to Binay, are being paid above minimum wages, with their overtime and third shift premium being subject to withholding income taxes.
Overtime pay refers to the "additional 25 to 30 percent compensation received by an employee for labor rendered in excess of the required maximum eight hours a day" On the other hand, the night shift premium is the extra 10 percent remuneration for work delivered between 10:00 p.m and 6:00 a.m.
"The overtime and third shift premiums (graveyard) of workers receiving more than the statutory minimum wage are slapped up to 32 percent in withholding taxes, depending on the employee’s tax bracket," Binay said.
Cedfit executive director Wilfredo Sa-a Jr. said salaries of BPO workers, if the proposed bill will be passed, can increase by 20 percent to 30 percent.
"This will be a significant addition to the disposable income of our workers and will either lead into more consumption and hopefully more savings or investments from them (…) My hope is that the workers will use their money wisely by spending on the right things and even consider investing," Sa-a told Sun.Star Cebu in an e-mail interview.
Canon, on her part, said the bill is also seen to encourage more workers to take graveyard shift since most of the call center agents today prefer to work on day time than at night.
"I see the bill as beneficial to the whole industry," Canon said.
Jon Michael Villordon, 22, has been working in a Cebu-based BPO company for nine months now and agrees on removing taxes for night shift salaries.
"It seems to be fun if the agents will receive the proper amount of payment sa ilahang service nga nahatag, kay it’s not easy waking up in the middle of the night then go to work. And sometimes there is also a hazard in going in to work during the night," he said.
Sa-a said the measure, if passed, can attract more BPO companies into the country.
"I think it will encourage more expansion of existing companies and it will attract new players on the assumption that this incentive will attract more workers to consider a career in this industry," Sa-a said.
Aegis People Support call center agent Eddie Cajoles, 22, said he will be encouraged to work in graveyard shifts if the bill will be passed. He added that others might also do the same.
Currently, Cebu employs more than 100,00 workers in the BPO sector, said Sa-a.
Posted by Veronica Silva Cusi, news correspondent
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Published: Tuesday, July 8, 2014