We got a very interesting question from a reader and Noet Ravalo has answered it in his column today.
I am now 69 years old and still working. But my saving is only P100,000. Will the government continue to impose tax on my saving in the bank? Where is the logic here? — Rose
Most people have mixed feelings about taxes. From an intellectual standpoint, we all know that if the government stops collecting taxes tomorrow, for example, life as we know it will drastically change. But on a personal level, who wants to pay more taxes?
The government, however, collects more taxes from us than many of us think. If you have deposits in the bank and it earns, say, P100 at the end of the year, you will get only P80 credited to your account. You lost P20 to tax on interest earnings.
Deposits in other currencies, say in dollars or yen, are charged the foreign currency deposit unit tax of 7.5%. But if you are an OFW or a foreigner who opened your account here in the country but no longer lives here, make sure you get an exemption from the BIR from the FCDU tax.
I know of a senior couple that owns a small farm in Mindanao. They wanted to open a bank account with a P3,000 cash gift they received recently. Their daughter discouraged them. What for? A deposit like that will earn almost nothing. Assuming they add to it, any interest they will earn, if any at all, will be automatically deducted with a 20% tax.
Since many salaried Filipinos use their bank accounts as an extension of their wallets and hardly check their statements, this tax on interest earnings is almost invisible. If you have savings or checking account statements, you would be surprised at how much you have paid over the course of, say, five years!
Senator Loren Legarda recently sponsored Senate Bill 269 which seeks to exempt senior citizens from the 20% tax on bank savings. Depatment of Finance Secretary Gary Teves said only rich senior citizens would benefit from the proposal because the poor don’t have any savings at all. The DoF also warns that the exemption could be exploited by younger members of the senior citizen’s family.
Unfortunately, it seems that there is no way to know if Teves is right because the Finance department has no official figures on the savings profile of senior citizens. That would be a big help. In the meantime, we all just have to pay our taxes, whether it’s a pleasant experience or not. Click on this link for Noet’s full column on taxes on deposits, and don’t miss the onions!
December 6th, 2007 at 3:24 am
good intention from sen legardo but sec teves is right. besides, the govt is always on a shortfall with usd 30B national budget for 86M(and increasing) filipinos, half of which are charity recipients. compare that with japan’s usd 900B for 140M (and going down) japs with no poverty incident, or usa’s usd 2.3T budget for 380M(maintained through immigrants) yanks. with p.i.’s population, the govt should have at least usd 500B budget to be at par. for this i strongly disagree with de-taxation.
December 6th, 2007 at 1:50 am
Hay naku Rose,
Essentially, what the taxologists sa senate naten is telling you and everyone else who are senior citizens is to stop saving. Tigil. That’s the unquestionable logic of their illogical thinking. Did I hear that some countries savings rate are even higher thatn 15% and that ours is waaa! as in beeeelllaat to a -0.000001% savings rate? But then again, that’s like moronic because what else is there to save when you can’t even live with what you have and all these illogical people that we put in there have got nothing else to do in their lives but steal all our monies and funds intended to us?
Grrrrrr!!! It really geothermalizes the heck out of me! If one is really serving FOR the country - one would think that encouraging the population to save increases the capital such that it could be used to better the lives of the population so it could be used for capital expenditures in the country. But my! oh my! oh my! These people have completely redefined what is capital expenditures. It’s “their capital” expenditures and NOT the taong bayan for they have all these luxury cars and luxury houses and luxury vacations! Don’t you think?
Ok… sorry for my rants. Basically what I’m saying is that - I’m definitely sure that people would not howl with the taxes collected if they see something in exchange for these. But what do we see? I guess, one just have to read the front pages. Amen.
December 5th, 2007 at 9:18 pm
[...] The government, however, collects more taxes from us than many of us think. If you have deposits in the bank and it earns, say, P100 at the end of the year, you will get only P…. [...]