House bill seeks to raise 13th-month pay tax exemption to P150,000

MANILA — Several lawmakers are seeking to raise the tax exemption ceiling for 13th-month pay and other benefits to P150,000.

Lawmakers from the Makabayan bloc —Antonio Tinio, Sarah Elago, and Renee Co— filed House Bill 7661, citing the need to reduce income tax burdens on ordinary wage and salary earners.

“Proposals for opportunities to decrease the income tax burdens of ordinary wage and salary earners, such as this Bill, are complementary to the demands of the labor sector and the masses for increased pay and lower prices of basic goods and services,” the bill reads.

At present, the National Internal Revenue Code says 13th-month pay and other benefits not exceeding P90,000 are excluded from gross income and are exempt from taxation. This includes productivity incentives and the Christmas bonus.

Aside from raising the tax exemption ceiling, the bill also seeks to make it mandatory for the Commissioner of Internal Revenue (CIR) to periodically review and raise the cap.

“It took twenty long years for the tax exemption cap to be adjusted, and through legislation since the CIR failed or refused to act on its authority to do so. In the meantime, wage and salary increases, as well as the unrestrained inflation, rendered the benefit of this provision–which is to provide opportunities for ordinary wage and salary earners to minimize the income taxes that they have to pay–negligible,” the bill reads.

“This Bill mandates the CIR to exercise this authority based on the consumer price index as officially estimated by the government and other estimates of the cost of living and current prices as estimated and issued by independent entities. The CIR shall make the adjustment upon consultation with labor in the private and public sectors,” the bill also said.

‘TAKE-ALL’ MODE FOR RETIRING GOVT. EMPLOYEES

The same lawmakers filed House Bill 7660 to reinstate the “take-all” mode of retirement for government employees.

According to the bill, the mode was included in RA 1616 for employees who started government service before June 1977 and rendered at least 20 years of service.

“There is hardly anyone today who could avail of this mode. The take-all mode operates on the ‘gratuity plus refund’ style, as opposed to the two options under R.A. 8291,1 namely, Option 1 or a five-year lump sum plus deferred pension and Option 2 or cash payment plus immediate pension,” the bill said.

This is a “common demand of many government employees” who spent or will spend 20 years in service but are disqualified from RA 1616, according to the bill.

“This Bill will add another option for would-be retirees who might want to receive greater benefits or wish that they themselves take hold, manage, and enjoy all of their retirement benefits while they are able or healthy enough to do so,” the bill reads.