Recto files measure raising tax exemption on bonuses | Inquirer News

Recto files measure raising tax exemption on bonuses

/ 06:07 AM December 16, 2013

Sen. Ralph Recto: Breathing life to the spirit of the law. INQUIRER FILE PHOTO

MANILA, Philippines—Sen. Ralph Recto has filed a bill increasing to P75,000 the amount in 13th-month pay, Christmas bonus and other benefits that would be exempt from income tax.

Senate Bill No. 256 seeks to raise the tax exemption ceiling of bonuses to P75,000, up from the present P30,000 set by law almost 20 years ago.

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“We owe it to the people to amend laws that tend to be more repressive than beneficial to the people. In this bill, we intend to breathe life again to the spirit of the law that, during the time of its passage, intended to allow the people to enjoy more of their hard-earned money,” Recto said.

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The senator said that if passed into law, “the increase in the tax exemption ceiling would translate to a higher take-home pay for employees in the private and government sectors alike, particularly during the Christmas season, when the 13th-month pay and other bonuses are usually released.”

Current laws exempt the mandatory 13th-month pay and the Christmas bonus from income tax, but only up to P30,000.

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The law provides that any amount in excess of that forms part of an individual’s gross income, and thus is subject to the National Internal Revenue Code.

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Recto said his proposal was premised on the fact that conditions prevailing in 1994 no longer applied to the present circumstances.

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That was the year Republic Act No. 7833, which imposed the P30,000 cap, was enacted.

“At that time, the lowest monthly basic salary for government employees was P2,800 and that of the president of the Philippines was P25,000,” Recto said.

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He said that today the lowest government salary was P9,000 and the president was being paid P120,000.

He said the National Tax Research Center and the National Economic and Development Authority had pegged exemption ceiling estimates as of 2011 at P72,000 and P75,000, respectively, if adjustments for inflation were reckoned from 1994.

Recto said his bill also provides that the ceiling of P75,000 shall be adjusted using the consumer price index as published by the National Statistics Office every three years after enactment.

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“It is of paramount importance that our laws be responsive to the needs of the people. An increase in the tax exemption ceiling for the 13th-month pay and other benefits is one of the relief measures the people need during these hard times,” he said.

TAGS: bill, Ralph Recto, Tax Exemption

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