Recto pushes for removal of tax on bonuses

MANILA, Philippines – Sen. Ralph Recto is pushing for the passage of a bill that would remove the imposition of income tax on 13th month pay, Christmas bonus and other incentives from P30,000 and below of government workers and private employees.

Recto filed Senate Bill 2879, citing the state policy to affirm labor as a primary social economic force by protecting the rights of workers and promote their welfare.

“The amount set in our tax code as the ceiling for the said tax exemption does not mirror prevailing circumstances. The ceiling of P30,000 for the exemption does not apply today as it did when it was incorporated in the tax code,” Recto explained.

Recto proposed to increase that ceiling and make it more responsive to the needs of the times. The measure sets the ceiling at P60,000 or approximately the equivalent amount of P30,000 today taking into consideration inflation and other factors.

“The law should always be responsive to the needs of the people. An increase in the ceiling of this particular tax exemption is one of the relief the people need during these hard times,” Recto added.

He cited the need to amend certain sections of the National Internal Revenue Code (NIRC), Presidential Decree 851, and Republic Act 6686 or the law granting Christmas bonus to national and local government officials and employees; and other benefits such as productivity incentives and other bonuses.

Recto, chairman of the ways and means committee, recommended the exemption from income tax of the 13th month pay and other benefits as stipulated in the NIRC.

“Gross benefits received by officials and employees of public and private entities: Provided, however, that the total exclusion under thus subparagraph shall not exceed P60,000,” read the amendment to Purpose Section of the NIRC.

The same also covers benefits received by officials and employees of the national and local government pursuant to Republic Act 6686; benefits received by employees pursuant to PD 851; benefits received by officials and employees not covered by PD 851; and other benefits such as productivity incentives and Christmas bonus.

The ceiling of P60,000 may be increased through rules and regulation issued by the Secretary of Finance, upon recommendation of the Commissioner, after considering among others, the effect on the same of the inflation rate at the end of the taxable year.

Recto’s proposal has been approved for first reading at the Senate committee on ways and means. –Christina Mendez The Philippine Star