City councilor seeks study on workers’ income tax exemption

By Jason B. Neola

A proposal that could dramatically reshape the country’s tax system is expected to spark wide-ranging reactions from various sectors, following the filing of a resolution by Naga City Councilor Nathan Sergio calling for a study on the possible exemption of public and private employees from paying individual income taxes.

Sergio said the idea—once unthinkable—may no longer be far-fetched if the national government seriously considers its potential economic benefits. He argued that exempting workers from income taxes could boost consumer spending, encourage savings, and stimulate overall economic growth.

The resolution urges concerned national government agencies to study the feasibility of exempting the large workforce in both the public and private sectors from filing and paying individual income taxes.

According to Sergio, this policy innovation could open greater opportunities for investment, enhance family financial security, and promote inclusive economic growth, particularly at the community and regional levels.

“These goals are not impossible to achieve,” Sergio said, noting that public and private employees make up a significant portion of the country’s taxpayers and consistently contribute to the national treasury through automatic salary deductions in the form of withholding taxes.

The resolution cited the rising cost of living as a key justification for the proposal. It noted that inflation, increasing prices of basic goods and services, and global economic disruptions have significantly eroded the purchasing power of Filipino wage earners in recent years.

Despite paying taxes regularly, the resolution said, the take-home pay of average employees often remains insufficient to cover basic needs, leaving little or no room for savings, investments, or discretionary spending—factors that could otherwise help drive local economic activity.

One taxpayer interviewed said exempting government and private employees from income taxes would strengthen their capacity to spend and circulate money within the economy, rather than channelling it to government coffers. “It is only logical to allow workers to keep more of their income so they can support their families and help the economy grow,” the taxpayer said.

If adopted, the proposal could potentially stimulate domestic consumption, improve productivity, and provide much-needed economic relief to the working population, according to the resolution.

Sergio emphasized, however, that the measure does not immediately seek to change tax policy but calls for a comprehensive study to assess the possible economic, fiscal, and social impacts of such an exemption.

Once approved, the Naga City government will forward the resolution to the Office of the President, the Department of Finance, the National Economic and Development Authority, and the Bureau of Internal Revenue, urging them to evaluate the proposal and open it to public discussion.

With its sweeping implications, the proposal is expected to draw reactions from labor groups, business leaders, economists, tax experts, and government agencies in the coming days, potentially igniting a national conversation on the future of income taxation in the country.

Copies or the resolution, once adopted, will also be sent to the office of Mayor Leni Robredo, office of Congressman Nelson Legacion of the 3rd district of Camarines Sur, and to the League of Cities of the Philippines for support and endorsement.