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FEB.

8, 2012 DATE

NR # 2673
REF. NO.

Solon wants 13th month pay and other employee benefits excluded from gross income
Another party-list lawmaker has proposed to raise to P60,000 from the current P30,000 ceiling the total exclusion from gross income of the 13th month pay and other benefits of officials and employees of government and private entities to increase their take home income for their families. Rep. Antonio Tinio (Party-list, ACT Teachers) said his proposal is in support of Article ll, Section 18 of the Constitution which recognizes labor as a primary socioeconomic force and affirms the mandate of the State to protect the rights of workers and promote their welfare. Despite this constitutional provision, Tinio said the majority of salary and wage earners in the private and public sectors suffer from indecently low pay as well as from meager benefits. With respect to employees in the civil service, their salaries oftentimes stagnate for long periods due to the failure of Congress to periodically amend the Salary Standardization Law. Workers in the private sector, on the other hand, have their wages tied to the politics and bureaucracy associated with the wages and productivity boards, he said. The misery on wages is compounded by the present income taxation law as he noted that even without considering the unrestrained inflation in prices of commodities and services, salary increases are hardly felt by employees in the public and private sectors. Whether the increases are caused by salary upgrading in a few agencies of the government, the implementation of the Salary Standardization Law 3, or regional wage hikes, the taxable incomes of employees also increase, and most of them become subject to higher tax rates, said Tinio, a vice chairman of the House Committee on Basic Education and Culture. He further said the 13th month pay and other benefits, generally based on the basic pay, also increase. In most cases, the present P30,000 ceiling for a total exclusion of these benefits apply, thus subjecting the excess of P30,000 to income tax according to him. Tinio cited one reason for this is that the National Internal Revenue Code (NIRC) and related revenue regulations have not kept pace with increases in compensation levels in the public and private sectors, as in the case of the P30,000 ceiling.

FEB. 8, 2012 DATE

NR # 2673
REF. NO.

Such legislative action of raising the ceiling to P60,000 for the total exclusion from gross income of the 13th month pay and other benefits will enable employees to have more of their income to take home to their families, he said. In House Bill 5661, Tinio sought the amendment of Section 32 (B)(7)(e) of the NIRC so that the 13th month pay and other benefits received by officials and employees public and private entities shall not be included in gross income and shall be exempt from taxation, provided that the total exclusion shall not exceed P60,000. This shall cover other benefits such as productivity incentives and Christmas bonus. The ceiling of P60,000 shall be increased through rules and regulations issued by the Secretary of Finance, upon annual review and recommendation of the Internal Revenue Commissioner and upon consultation with the labor sector in the private and civil service, after considering among others, the effect on the same of the inflation rate at the end of the taxable year according to the bill. Similarly last year, Bayan Muna Reps. Neri Colmenares and Teddy Casio filed House Bill 4177 seeking an increase in the ceiling for total exclusion of the Christmas bonus and other benefits from the computation of taxable income from P30,000 to P40,000 to provide workers and employees reprieve from the countrys worsening economic condition. Colmenares and Casio pointed out that bonuses and other additional benefits during Christmas come only once a year, and at a time when prices of commodities increase because of the demand for more food on the table to celebrate the season. (30) rbb