Senate hikes proposed 13th month pay tax exemption to P82k

MANILA, Philippines – The Senate has approved on second reading a bill that now seeks to raise the tax exemption cap for 13th month pay and other workers’ benefits  to P82,000 ($1,819*) – higher than the original proposal.

Senator Juan Edgardo Angara, sponsor of Senate Bill 2437 bill and chair of the Senate ways and means committee, accepted the proposed amendment of Senate President Pro Tempore Ralph Recto to raise the tax exemption cap to P82,000 on Tuesday, November 18.

The cap originally proposed in the measure is P75,000 ($1,664), from P30,000 ($665) under Republic Act 7833.

“I welcome the amendment of Senator Recto, the resident tax expert of the chamber. He is correct in saying that if we are to follow the logic of the proposal, we must use the correct figure consistent with the inflation rate,” Angara said.

The senator said that the Recto’s proposed tax exemption ceiling was the “same figure” given by Internal Revenue Commissioner Kim Henares during one of the hearings on SB 2437.

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

Recto said that the figure came from the National Economic Development Authority (NEDA), which he headed during the previous administration, using the inflation rate as of October.

Under the proposed measure, adjustments to the tax exemption ceiling should be made every 3 years after the effectivity of the law, in consideration of inflation.

RA 7833, which set the P30,000-tax exemption ceiling for 13th month pay and other bonuses, was enacted in 1994 and had not been adjusted for inflation.

Senate President Franklin Drilon introduced an amendment to the bill stating, “the failure of the Secretary of Finance to promulgate the necessary rules and regulations shall not prevent the effectivity of the law.”

The Department of Finance has projected a P30-billion ($665.5 million) revenue loss over the measure, but other resource persons at the committee hearings on SB 2437 pegged it at only P3 billion.

The measure is expected to benefit about half a million employees. 

Senators want the measure to be passed in time for Christmas, as a timely gift for hard-working Filipinos. – Rappler.com

*$1 = P45