House passes 13th month pay tax exemption bill

MANILA, Philippines - A bill seeking to raise the tax exemption ceiling of the 13th month pay and other bonuses from P30,000 to P82,000 was passed by the House of Representatives yesterday.

The House formally adopted Senate Bill 2437 as its own version on motion of Majority Leader Rep. Neptali Gonzales II.

That means the Senate and House version will no longer have to go through the bicameral conference committee to reconcile the bill and only President Aquino’s signature is needed for the bill to become law.

In the House version, the ceiling is P70,000, lower than that in the Senate version.

However, the law to be passed might not take effect this year as the Department of Finance (DOF) has to draft the implementing rules and regulations, Gonzales said.

House committee on ways and means chairman Romero Quimbo, the bill’s principal author, said they have consolidated the House and Senate versions on the higher exemption for tax on bonuses so workers can immediately benefit from it.

“With this initiative from the House, we are now even more certain that this measure, which the House has diligently worked on the past months, will become a law before the year ends and its envisioned benefits will be felt by the people as early as June 2015, when the first half of the 13th month pay is received by employees,” he said.

Senate committee on ways and means chairman Juan Edgaro Angara had originally endorsed a P75,000 tax-free bonus.

However, Senate President Pro Tempore Ralph Recto introduced an amendment to seek to increase tax exemption to P82,000 to make it consistent with the inflation rate.

Angara gave way to Recto, whom he described as the tax expert of the Senate.

Bureau of Internal Revenue (BIR) Commissioner Kim Henares told lawmakers that P30,000 in 1994 would be worth around P82,000 today.

Recto said P82,000 was also the amount that the National Economic and Development Authority (NEDA) arrived at when computing inflation from 1995 up to last month.

The authors dismissed warnings from the BIR and the DOF that the exemptions would lead to revenue losses.

Recto said whatever is the revenue loss for the government is income gained for the worker.

“And even if his 13th month pay is tax exempt upon receipt, it will be taxable when spent,” he said.