BIR Ruling

August 13, 1975 Mr. Luis Gutierrez Batangas City S i r : This refers to your telegram dated February 20, 1975 to the President of the Philippines, requesting the increase in the amount of personal exemptions of P1,000.00 to P2,000.00 for dependent children and P3,000.00 to P6,000.00 for married or head of the family due to high cost of living. In reply, I have the honor to inform you that while the clamour for increased personal and additional exemptions seems to find merit in the light of increasing cost of living, nevertheless, this Office is not included to recommend for the present any increase in the amount of statutory exemptions in view of the following reasons: 1. Out of over 4 million income tax return filers, only about 600 thousand are filing taxable returns. Any increase in exemptions will further erode the tax base. 2. The income tax is a direct tax. By paying it, the taxpayer establishes his link with the government, and he can rightfully say that he assumes his proper share of the tax burden as a bona fide stockholder of the New Society. To increase the amount of exemptions would be to reduce the number of direct supporters of the government, a result that is not conducive to the promotion of discipline, nationalism and love of country. 3. To give in the clamour for increased exemptions would set back by decades our tax consciousness campaign, whose main thrust has been to inculcate in the minds of taxpayers the value and significance of taxes to the economy, and the importance of maximum voluntary compliance by taxpayers with their tax obligations. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5