Bill raising bonus tax ceiling passes
MANILA, Philippines—A measure proposing to remove the tax on the 13th-month pay, Christmas bonus and other employee benefits under P70,000 has been approved on third reading in the House of Representatives.
FILE PHOTO/congress.gov.ph
House Bill No. 4970, which raises the tax exemption ceiling, was unanimously approved by the 250 lawmakers present in the lower chamber on Friday, despite opposition from the government’s tax officials and economic managers.
If passed into law, HB 4970 will stop the Bureau of Internal Revenue from collecting taxes on employees’ bonuses and other perks not exceeding P70,000.
The current tax ceiling for such benefits is P30,000.
The National Internal Revenue Code provides that gross benefits received by officials and employees of public and private entities are exempt from tax, provided the benefits are below this ceiling.
Finance Secretary Cesar Purisima earlier said the government stood to lose anywhere from P40 billion to P60 billion if House Bill No. 4970 were approved.
But proponents of the bill said raising the tax ceiling was warranted considering that it was set almost two decades ago. The Tax Code was enacted in 1997.
“We strongly believe this measure edifices the goal of the President to create a growth that is inclusive,” said Marikina Rep. Miro Quimbo, chair of the House ways and means committee.
“Other economies have proven the best way to ensure that growth is rapid and felt by most is to increase the purchasing power of the consumer, by putting more money at his disposal. The net take-home pay of wage earners now increases with the reduction of the taxes,” he said.
The ways and means panel pegged the loss in tax revenue at only P1.5 billion a year. DJ Yap
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