Wednesday, November 26, 2014

Senate okays P82k hike for tax exemption of bonuses

MANILA- Employees from both the private and public sector can expect a bigger take home-pay soon, with the Senate’s approval of a bill seeking to raise the tax exemption ceiling of 13th-month pay and other benefits from P30,000 to P82,000.

            Senator Juan Edgardo “Sonny” Angara, co-author and sponsor of Senate Bill 2437, says that once the bill is enacted into law, employees receiving 13th-month pay and other benefits, including Christmas bonuses and productivity bonuses, not exceeding P82,000 will be exempted from tax.

The original bill pegged the ceiling for tax-exempt bonuses at P75,000 but was raised to P82,000 upon the proposal of Senator Ralph Recto during plenary deliberations. Angara, chair of the Senate Committee on Ways and Means, said he accepted Recto’s amendments because his proposal was the “same figure given by internal Revenue Commissioner Kim Hernares during eone of the hearings on SB 2437.

            “She (Henares) said that P30,000 in 1994 would be worth around P82,000 today,” Angara said.

Senate President Franklin M. Drilon concurred with the hike, saying that the bill’s passage is necessary "to provide relief to state and private workers whose purchasing power has been shrinking for years due to inflation, but still have had to deal with the consequences of an outdated law."

            When the P30,000 tax ceiling was first legislated in 1994, Angara explained, the basic salary of a government employee in the lowest rung was P3,800 a month while that of the President was P25,000. The ceiling, he noted, had not been adjusted in 20 years although Congress had legislated other measures to soften the impact of inflation on the workers.

            More importantly, Angara said, SB 2437 had included a provision “that the adjustment be made mandatorily every three years to coincide with major surveys conducted by the Philippine Statistics Authority such as the Family and Income Expenditure Survey.”

            Recto, principal author of the bill, said the peso had lost two-thirds of its value over the past 20 years. The equivalent of one peso in 1994, he said, was worth 36 centavos today. Recto was Director-General of the National Economic and Development Authority in 2008.

“When the 17-year-old Bam Aquino sipped his first beer in 1994, Pale Pilsen cost P8.50 a bottle. Of course, Sen. Sonny Angara, on vacation from his London studies then – or I am told that he graduated in 1994 – and if he were to borrow one of his dad’s cars, he would have paid P8.50 for a liter of gasoline,” Recto said in his co-sponsorship speech.

While some experts estimated that government would lose around P42 billion in taxes with the enactment of SB 2437 into law, Recto argued that there was no basis for the computation.

A more reasonable computation of tax loss, he said, was estimated by the Philippine Institute for Development Students at P2.6 billion and Dr. Stella Quimbo of the University of the Philippine School of Economics at P5.6 billion.

“But whatever is the revenue loss for the government is actually income gained for the workingman. And even if his 13th month pay is tax exempt upon receipt, it will be taxable when spent,” Recto said, adding that taxes not withheld at source will later be captured in the form of sales tax at points of sales.

In response to concerns about the speedy implementation of the law, Drilon had also introduced an amendment to the bill stating that “the failure of the Secretary of Finance to promulgate the necessary rules and regulations shall not prevent the effectivity of the law.”.
“This is because it is up to the Department of Finance and the Bureau of Internal Revenue to come up with the implementing rules and regulations when this law is passed, and they may not have enough time to accomplish that in time. But surely, the law will be fully implemented next year,” the Senate leader noted.

For his part, Senator Manuel “Lito” Lapid Jr. then said that “increasing the cap of exemption on the 13th month pay and other benefits from income tax would increase the disposable income of the working class.”

This in turn, Lapid said in his co-sponsorship speech, would stimulate consumption.

“All reasons to increase the cap for the tax exemption on the 13th month and other benefits points to one thing: to enhance the welfare of the working class,” Lapid said.   (Pilar S. Macrohon)

No comments:

Disclaimer

Disclaimer: The comments uploaded on this blog do not necessarily represent or reflect the views of management and owner of "THE CATHOLIC MEDIA NETWORK NEWS ONLINE".

Should the Philippine government legalize same-sex marriage?