By Chino S. Leyco
The Department of Budget and Management (DBM) is not opposing the planned increase in the salaries of public school teachers, but doubling their take-home pay would require P343.7 billion which would hike the budget deficit from 3 percent of GDP to 5 percent, Secretary Benjamin Diokno said on Wednesday.
This would put at risk the excellent international financial standing the Duterte Administration has built over the past 18 months, he said. “We have to ensure that our public sector deficit remains manageable,” he added.
“Alternatively, we may raise more taxes or reduce other expenditure items,” Diokno said. “Raising P343.7 billion is a monumental task.”
“Consider that Package 1-A of TRAIN is expected to deliver about P90 billion in revenues, yet this is only about one-fourth the amount needed to finance the doubling of salaries of teachers,” the secretary said.
The DBM chief said President Duterte’s instruction is “to look into increasing their salaries, not doubling them.”
“I understand the crucial role teachers have in nation-building and I do believe they should be rewarded accordingly,” Diokno said.
The secretary said the take-home pay of teachers has already increased this year with the implementation of the Third Tranche of the Salary Standardization Law (SSL).
Furthermore, government personnel, including teachers, may expect another round of salary adjustments with the Fourth Tranche of SSL to be implemented in 2019, he added.
Currently, an entry-level public school teacher (Teacher 1), with Salary Grade 11 under Tranche 3 of the SSL, earns a monthly salary of P20,179. He/she will also enjoy bonuses and allowances amounting to P74,358 a year. This rounds up the monthly compensation package of teachers to P26,375.
By 2019, Diokno said, their monthly salaries will increase to P20,754 and their total annual bonuses and allowances will increase to P75,508. This would raise their monthly compensation package to P27,046 – an increase of P671.
At the same time, teachers will have a significant reduction in taxes with the lower personal income tax rates imposed by TRAIN. This will further increase the take-home pay of teachers.
A Teacher 1 is tax-exempt under the TRAIN law as his/ her annual taxable income falls below P250,000. Additional take-home pay due to lower taxes will amount to P35,537 for a Teacher 1.
The combined effect of the increase in salary from the SSL and lowered tax rates due to the implementation of TRAIN law will be an additional take-home pay of P43,363 per year.
In 2019, the annual tax savings will increase to P37,262 as it is indexed to salary. Additional take home pay due to SSL and TRAIN will increase to P45,312.
Secretary Diokno cautioned against sacrificing spending for other budget priorities, such Build Build Build, Free College Tuition, Marawi Rehabilitation, and the Cash Transfer Program of the government.
“We must think and prioritize long-term solutions for our country’s development and for the people’s general welfare,” he said.