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Solon proposes P60K ceiling of total-tax exclusion from gross income of 13th-month pay, other benefits

11 February 2012 No Comment

A legislator on Wednesday sought 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 State workers and  private employees to increase their take home income for their families.

House Bill 5661, will complement House Bill 4177 that seeks to increase 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 country’s worsening economic condition.

In filing HB 5661, Party-list Rep. Antonio Tinio of Act Teachers wants to amend Section 32 (B) (7)(e) of the National Internal Revenue Code (NIRC) so the 13th-month pay and other benefits received by officials and employees of government and private-sector workers shall not be included in gross income and shall be exempt from taxation, provided that the total exclusion shall not exceed P60,000.

Tinio 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.

Tinio noted that despite this constitutional provision, 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,” Tinio said.

The misery on wages, Tinio said 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.

He 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.


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