Weren’t bonuses tax-free? Teachers want to know

MANILA, Philippines–A teachers’ group has asked for an explanation from the Department of Education (DepEd) and the Bureau of Internal Revenue (BIR) about the tax deductions imposed on the public school teachers’ performance-based bonus (PBB) which they thought was among the bonuses that were tax-exempt.

Some teachers said they were surprised to find tax deductions when they received the latest PBB.

The Teachers Dignity Coalition (TDC) said it found that the tax imposed on the PBB varied across school divisions, with some being taxed 8 percent, while others were deducted as much as 30 percent, and still others were not taxed at all.

According to the TDC, the tax was unconscionable as many teachers had not even received their PBB for 2013 yet.

“This PBB scheme is unfair and deceptive and would further divide the government employees,” said TDC chair Benjo Basas.

The PBB replaced the across-the-board P10,000 cash gift given at the end of the year to all government employees during the Arroyo administration.

The amount ranged from P5,000 to P35,000 depending on the performance rating of an agency and its employees.

Under the PBB scheme, agencies within a department vied to be rated the best-performing agency while employees were ranked against each other so that only a small percentage of the entire government work force got the maximum bonus.

Basas said a majority of the teachers nationwide were still waiting for their 2013 PBB despite the government promising to release it by October 2014.

And then those who received their bonuses just before the close of 2014—from Cagayan Valley (Region II), Central Luzon (III) Calabarzon (IV-A), Central Visayas (VII) and Metro Manila (National Capital Region—found that these had been taxed.

Basas said the taxes differed across the country. He said the TDC found that the taxes imposed in some schools in Cebu, Nueva Vizcaya and Isabela was 10 percent; in Negros Oriental it was 20 percent; and 8 percent in Tarlac and Pampanga.

In some cases, teachers found their PBBs had been deducted 25 and 30 percent for taxes, he said.

And yet some divisions, especially in the National Capital Region and Calabarzon, suffered no deductions, Basas said.

According to Basas, the teachers had thought that the PBB was included in the bonuses that Revenue Memorandum Order No. 23-2014 had declared to be exempt from tax.