The House committee on ways and means yesterday approved a measure seeking to more than double the income tax exemption cap for employee bonuses to P70,000 from the current P30,000 ceiling. The body is now drafting a consolidated measure from at least nine bills dealing with this proposal. The measure covers the 13th month pay “and other benefits” like Christmas bonus and productivity incentives.
“What we approved today is... we’re exempting all Christmas bonuses... 13th month pay to the extent of P70,000 that will no longer be taxed,” committee chairman Rep. Romero S. Quimbo of Marikina (2nd district) told reporters at the sidelines of a committee hearing, citing a pressing need to raise the exemption ceiling in order to provide Filipino workers some relief from continued rising prices.
He noted that the current exemption level was set in 1994, hence, the need to adjust the current value to take inflation into consideration.
The approval of such measure is a first in recent years. Two similar bills were filed in the 15th Congress, but failed to gain the nod even at the committee level.
Also yesterday, Senate President Franklin M. Drilon said his chamber has already agreed with the House to approve the measure in time for Christmas season.
“We have an agreement with the House of Representatives that we will pass this bill within the year, so that Christmas could be merrier for our workers,” a statement quoted him as saying.
“There is really a need to revisit the antiquated provisions of Republic Act No. 7833, which imposed the P30,000 cap on bonuses back in 1994.”
The Trade Union Congress of the Philippines (TUCP) lauded the committee approval of the bill. “A legislative measure such as this is very much welcome, especially at this time when workers... worked so hard to bring about improved economic growth of the country,” TUCP spokesman Alan A. Tanjusay said in a text message, referring to gross domestic product growth that slowed but still surprised at 6.4% last quarter, spurring first-half economic expansion to 6.0% against the government’s 6.5-7.5% target. “We want to see the bill become into law so that Filipino workers will feel rewarded for their hard work.”
The Employers Confederation of the Philippines (ECoP) also threw its support behind the measure, saying it could help lessen workers’ demand for an increase in wages. Besides that, ECoP President Edgardo G. Lacson added that the proposal would help stimulate the economy.“It’s very very positive,” Mr. Lacson said in a telephone interview. “What the government will lose in [income] tax, they can collect in other taxes” that will rise with increased consumption.
The House ways and means committee is also set to consolidate nine measures seeking to trim individual and corporate income tax rates, again citing the need to adjust levels to inflation.
“We are taxing individuals more now for the same value of their salaries,” Mr. Quimbo noted.
“Tax burden today is being shouldered by ordinary income earners because they have no choice.”
The Senate is in sync with the move, with Mr. Drilon yesterday saying: “Congress is aware of the necessity to revisit our existing tax structure, which has remained unchanged since 1997.”
“Congress is committed to pass legislation that will lower individual income taxes in order to help our workers deal with the effect of inflation,” Mr. Drilon said.
“If the salary hike that our workers have been asking the government to provide is not yet possible due to fiscal constraints, legislation that will increase workers’ net take-home pay is the best alternative we can work on.”
Emphasizing his department’s stand during the committee hearing yesterday, Finance Undersecretary Jeremias N. Paul, Jr. said lawmakers must take a “holistic approach” to tax reform, saying “there should be a revenue measure that will essentially plug the loophole” of about P40 billion from the raising of the bonus exemption cap alone. -- M. L. T. Lopez
source: Businessworld
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