Law reducing tax bite on bonuses could rev up PH economy, says senator
Senator Alan Peter Cayetano. INQUIRER FILE PHOTO
MANILA, Philippines—A bill reducing or, in some cases, eliminating the tax on Christmas bonuses and other benefits, if passed into law, may help perk up the economy to finish strongly in the fourth quarter, a senator said Friday.
Given the economic slowdown in the third quarter, Senate Majority Floor Leader Alan Peter Cayetano urged President Benigno Aquino to take “a second look’’ at the measure with a view to signing it immediately.
“The sooner we give money back to the middle class, the better for the economy,’’ Cayetano told reporters in a briefing. “The more we put money in their pockets, the more they would spend.’’
Senators voted 14-0 Wednesday to approve on final increasing the tax-exempt portion of the 13th-month pay and other benefits from P30,000 to P82,000.
Senate Bill 2437 seeks to exempt from tax employees receiving 13th month pay and other benefits, including Christmas bonuses and productivity bonuses not exceeding P82,000.
The original P30,000 tax exemption cap has not been adjusted since 1994.
Senate leaders, however, conceded this might not be implemented this year because of time constraints.
If the President signs it into law anytime, the Department of Finance and the Bureau of Internal Revenue may not have enough time to craft the implementing rules and regulations, they said.
The economy grew by 5.3 percent from July to September, no thanks to port congestion, reduced government spending and lower agricultural output.
Senator Juan Edgardo Angara, sponsor and co-author 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.’’
Otherwise, he added, “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.”
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 much less than P6 billion will be lost, but the return will be much more than P6 billion,’’ he said.
“I ask the President to take a second look, in the same manner he wants us to look at the rationalization of fiscal incentives,’’ Cayetano added.
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.
Finance officials had tried to stop the committee’s sponsorship of the measure in the plenary in view of a new study showing high revenue losses for the government if this was enacted into law, senators said.
The senators said finance officials wanted to delay its approval because they had 2014 collection targets to meet.
