Senate OKs bills on tax exemptions, incentives

The Senate has approved two revenue measures that will impact on ordinary wage earners’ tax deductions and promote the affordability of hybrid, environment friendly vehicles like the Toyota Prius.

The Senate passed on third and final reading Senate Bill No. 2855, the proposed Family Care Act of 2013, that seeks to lift the limit on the number of qualified dependents that a taxpayer may claim for tax deductions.

It also approved Senate Bill No. 2856, or the Alternative Fuel Vehicles Incentives Act, which grants tax incentives to manufacturers or importers of alternative-fuel vehicles to make such cars more affordable.

Sen. Ralph Recto, the chairman of the Senate committee on ways and means who sponsored the measure, said SB 2855 seeks to amend Section 35 of the National Internal Revenue Code of 1997 that limits the number of dependents to only four at P25,000 per dependent.

Economic reprieve

 

“The impact of the bill is on the economic reprieve that will be granted to families, alleviating the financial difficulties of taxpayers with more children, and allowing individuals to cope with the cost of caring for parents and legitimate children or children with disabilities,” he said.

According to Recto, the cap on the number of dependents was established in 1973 to promote family planning but has had the effect of discriminating against taxpayers with large families.

The rationale for removing the limitation on the number of qualified dependents is that setting a ceiling on the number of dependents has no bearing on the decision of couples to beget children, he said.

This view is supported by economists, Recto said.

SB 2855 also proposes the expansion of the coverage of qualified dependents to include parents who are dependent on a taxpayer for support and are living with him or her.

Extended exemptions

The bill also proposes to extend coverage to a parent or parents, regardless of income, who are incapable of self-support because of mental or physical disability.

“We also propose to allow a taxpayer who acts as the legal guardian of a person with mental or physical handicap, regardless of age and incapable of self-support, to claim the additional exemption for these dependents,” Recto said.

Besides Recto, the other authors of SB 2855 are Senators Manuel Villar, Lito Lapid and Antonio Trillanes.

Recto, who also authored the proposed Alternative Fuel Vehicles Incentives Act, said the proposed law “will usher [in] an era of cheaper, cleaner cars that will reduce the country’s dependency on the use of fossil fuels.”

Alternative fuel incentives

 

Under SB 2856, fiscal and nonfiscal incentives will be granted for the importation and manufacture of electric, hybrid and other vehicles using alternative sources of energy such as, but not limited to, solar, wind, hydrogen fuel cell, compressed natural gas or liquefied natural gas, methane and liquefied petroleum gas.

He said the manufacturers or assemblers of completely knocked down units of alternative fuel vehicles, or AFVs, including the conversion of vehicles into electric, hybrid and other AFVs, will be exempted from payment of excise taxes and duties for nine years.

Manufacturers and assemblers of such vehicles will also be exempt from the payment of the value-added tax for the purchase and importation of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of AFVs, also for nine years.

Recto said importers of completely built units of AFV will be exempt from payment of excise taxes and duties for nine years, while owners of AFVs will be exempt from the payment of the motor vehicle user’s charge (MVUC) upon registration of their vehicles.

Nonfiscal incentives granted under the proposed measure include priority in the registration and issuances of plate numbers and priority in franchise applications for public utility vehicles.