On the new taxes on government employees’ non-salary benefits

Protests by government employees over the new BIR ruling on their non-salary benefits in early August sparked my curiosity to know what exactly these benefits are. Later in the week, the economist Solita Collas-Monsod’s article Gov’t Employees No Longer the Downtrodden appeared in The Philippine Inquirer.

The latest data on employees of the Philippine Government indeed show that contrary to popular depiction of them in the news they are not “struggling to survive on their meager pay”.

Consider the following:

Based on an infographic on Presidential Communications Development & Strategic Planning Office (PCDSO), the average Juan dela Cruz receives PHP17,255 as monthly salary exclusive of allowances and other benefits. These allowances and benefits, prior to the present Administration, usually include bonuses received at mid- and end of the calendar year, fixed cash gift, and Productivity Enhancement Incentive (PEI) at year end. Under the present Administration, through Executive Order 80 s. 2012, there is now the Performance-Based Bonus under the Performance-Based Incentive System. According to the Order, the PBB ranges from PHP5,000 minimum to PHP35,000 maximum. These allowances and benefits however do not include benefits in-kind such as clothing, rice, etc.

via Presidential Communications Development & Strategic Planning Office
via Presidential Communications Development & Strategic Planning Office

In reality, then, the average Juan and Juana dela Cruz receives more or less PHP33,000 to PHP62,000 yearly in in-cash benefits on top of PHP17,255 monthly gross salary plus PHPxxx worth of in-kind benefits. If government employees on this pay and benefits are “struggling to survive”, what adjectives do we ascribe to the absolute poor (living on less than USD2 daily)?

I remember, in the villages, when we draw up lists of families eligible for projects, the few residents who are employed in government would write their names on the lists and insist on it, to which residents who are unemployed vehemently would decry. According to the latter, government workers are not one of them, the poor. According to the government workers, they are. The conflict in perspectives proves the adage that wealth is relative. If you have more, you’d want some more because paradoxically your needs have grown in proportion to your capacity. For the record though salaried employees are ineligible.

But, I’d like to locate salary and non-salary structure of government workers as a crucial part of the Government’s reform agenda. A basic indication of organizational efficiency is financial ratios, in this case, is the organization/agency getting back expected returns, in the form of citizen satisfaction, from the amount it has invested (salary, allowances, training and development) in it’s human resources? What for instance is the length of time that a citizen spends in having requirements for, say, driver’s license processed? And was he in the process scowled at for no reasonable reason by the personnel behind the window? Because that’s what all those PHP33,000 to PHP62,000 non-salary benefits are for, isn’t it?

Going back to the PCSDO infographic, the following are the criteria Departments must meet in order to qualify for the additional bonus, the PBB:

There appears nothing on quality processes and systems. There’s the mention of a Citizen’s Charter but unless I misunderstood the statement it only pertains to just the Charter or document, not the actual ‘live running’ of the government-side of the Charter’s system and processes e.g. what percentage of citizen feedback are actually responded to and in what length of time and in what manner? Ironically, citizens especially in rural areas are not impressed that there is such a Charter because their experience has been that when they do avail the processes elaborated by it they usually end up being lectured on as if by instigating the said process there’s nothing between their ears. I cringe when I hear civil servants lecturing people, shaming them in public. Don’t they realize their pay also comes from the very people availaing their service and paying transaction fees?

When government employees are like that, the tax on their allowances and benefits fails to concern the citizenry except themselves. The concern rather is, why all those bonuses on top of each other?

Public services have not been made more efficient as a result of additional performance incentives. Doing business in the country looks dismal.

The PBB appears to nullify it’s own objective because, with or without it, non-performers will still receive all previous bonuses and benefits in full. But if the PBB were to replace all previous bonuses and allowances, it may have achieved the intended effect which supposedly is to change worker behavior (i.e. encouraging good work, discouraging bad work).

Is taxing all these bonuses and benefits the solution to realign the intended effect? It doesn’t because now government employees are angry and I doubt they’d see sense in any explanations given after the fact of the policies.


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