Bonus tax cap seen to boost economy
Approving the proposed legislation to raise the tax cap on the Christmas bonus and other benefits may help to invigorate the economy so it will finish strongly in the fourth quarter, according to Sen. Alan Peter Cayetano.
Cayetano, the Senate majority leader, urged President Benigno Aquino III to take “a second look” at the measure with a view to signing it this year, considering the economic slowdown in the third quarter.
“The sooner we give money back to the middle class, the better for the economy, the more we put money in their pockets, the more they will spend,” Cayetano told reporters at a press briefing yesterday.
“I ask the President to take a second look, in the same manner he wants us to look at the rationalization of fiscal incentives,” he said.
Senator Alan Peter Cayetano. INQUIRER FILE PHOTO
The President’s finance officials have opposed the measure citing a study showing high revenue losses for the government if it is enacted into law.
Finance officials seek delay
The senators said finance officials wanted to delay the bill’s approval because they had 2014 collection targets to meet.
The senators late Wednesday voted 14-0 to approve on final reading the bill capping the taxable amount of the 13th-month pay and other benefits at P82,000, from the previous P30,000.
Senate Bill No. 2437 seeks to exempt from taxes employees receiving the 13th month pay and other benefits, including Christmas bonuses and productivity bonuses, not exceeding P82,000.
Time constraints
The original P30,000 tax exemption cap had not been adjusted since 1994.
Senate leaders, however, conceded that the measure, even if signed into law, might not be implemented this year because of time constraints.
If the President signs it into law anytime, the Department of Finance (DOF) and the Bureau of Internal Revenue may not have enough time to draft the implementing rules and regulations, they said.
The economy grew by a disappointing 5.3 percent from July to September, blamed largely on port congestion, reduced government spending and lower agricultural output.
More disposable income
Sen. Juan Edgardo Angara, the sponsor and coauthor of SB 2437, agreed that the tax measures being pushed by the Senate “would probably help families as well by giving them more disposable income.”
“I expect spending by both the public and private sector to improve in the fourth quarter, given that it’s Christmas and given that the government has probably learned lessons from the port congestion and DAP decision,” he said.
By raising the tax cap on year-end benefits, Angara said the Senate was looking at a long-term goal of addressing inequities in the country’s tax system and not merely “short-term growth issues.”
“A tax system must reflect our society’s aspirations, not just at the level of government, but even more so at the level of our citizens and their families,” he said in a text message.
But since the measure has yet to be transmitted to Malacañang, Angara said it was premature to call on the President to sign it.
Cayetano said he expected the President to sign the measure.
“I don’t think the President will refuse to sign it. The only debate in the DOF is if it’s this year or next year, and how much revenue will be lost. The Senate side is convinced [that] much less than P6 billion will be lost, but the return will be much more than P6 billion,” he said.
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