Pending bills in the Senate will raise the tax exemption ceiling from P30,000 to P60,000, thereby benefiting more government and private employees, a Senator said on Thursday.
“More government and private workers would enjoy higher tax-free bonuses and other benefits up to P60,000 to P72,000 once the P30,000 ceiling on tax-exempt benefits is increased,” Senator Ralph G. Recto, chairman of the ways and means committee, said in a statement.
The ways and means chairman filed mid-last year Senate Bill No. 2879 titled 13th Month Pay, Christmas Bonus Excluded from Gross Income taxation.
He noted: “In the midst of soaring prices oil, commodities and utilities like power and water, the approval of this measure will give our workers something to look forward to at the end of 2012.”
Likewise, another senator, Miriam Defensor-Santiago, filed a similar bill last year increasing the tax cap for employees, Senate Bill No. 2739 or the Christmas Bonus and other Benefits Tax Exemption. Unlike Recto’s version, the lady senator wanted the cap to be raise to P40,000 or P10,000 more than the current P30,000 ceiling.
Both bills are pending at the committee level.
The 1997 National Internal Revenue Code Section 32(B) Chapter VI states that private and government employees having bonuses beyond P30,000 were automatically subjected to income tax.
Senator Recto explained that “the current P30,000 cap on tax-exempt bonuses as provided in the National Internal Revenue Code (NIRC) is outdated” citing that the “ceiling was arrived at when the lowest monthly basic salary for employees with Salary Grade 1 was P2,800 and that of the President of the Philippines with Salary Grade 33 was P25,000.”
“The P30,000 ceiling is now practically worth P15,000 while the ceiling should be adjusted to as high as P57,000 due to inflation,” the senator said citing a figure presented by the National Economic Development Authority.
Currently, the Salary Grade 1 for government employees is paid P8,287 while the Salary Grade 33 receives P107,470.
“[The] projected losses from the ceiling adjustment could be off-set by new revenues to be realized with the rationalization of fiscal incentives, adjusting the sin tax rates and even by proceeds from the estimated P120 billion coconut industry investment fund parked in San Miguel Corp.,” the senator added. —TJD, GMA News