Manila: President Gloria Arroyo on Tuesday signed into law a measure exempting minimum wage earners from paying income tax.
According to Arroyo, Republic Act 9504 is expected to partly ease the burden on Filipinos who are already saddled with high cost of living as a result of rising prices of commodities.
The new law also provides increased personal exemptions for other employees.
Proponents had earlier said the measure will not affect the government's tax revenue since the lost collections will be funnelled back into the economy through increased consumer spending.
Arroyo, who for several occasions urged Congress to pass this "urgent Bill", was reportedly pleased that lawmakers had passed the measure.
It also exempts from tax, all holiday, night differential, hazard and overtime pay received by minimum wage earners. Minimum wage earners had bore the brunt of hardships from the increasing cost of living in the Philippines.
In recent months, the country had witnessed an unprecedented inflation reaching 9.6 per cent in May, the highest since January 1999.
Finance Secretary Margarito Teves said the government would forego some 3.16 billion pesos (Dh73 billion) annually in tax revenues.
He added that the new personal exemption levels would also cost government some 11.09 billion pesos.
