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Higher cap on tax-exempt 13th month pay put off for 2015


Both houses of Congress may have already passed their versions of a bill imposing a higher cap for tax-exempt 13th-month pay and bonuses, but its implementation that could result in a happier Christmas for salary-earners and their families this year might have to wait for 2015.

Senate Pro Tempore Ralph Recto, who proposed the amendment to raise the tax-exempt amount to P82,000, indicated that the Senate would delay the approval of Senate Bill 2437 on third and final reading than risk the measure getting vetoed by President Benigno Aquino III.

"I was willing to put an amendment in the bill na effective immediately but there seems to be a request so ganyan talaga, part of compromise 'yan," Recto said.

"At least ang kapalit, itinaas from P75,000 to P82,000 ang cap. Maliwanag ang effectivity nito next year na. Kaysa naman ipasa mo ngayon baka i-veto pa [ng Presidente], might as well next year na,” Recto added.  

The Senate bill was initially for a P75,000 cap.

Both chambers sought to increase the ceiling from the current P30,000. 

The Senate on Wednesday passed on second reading the bill increasing the tax exemption cap for 13th month pay from the present P30,000 to P82,000.

The House of Representatives passed its version of the measure earlier in September, but exempting 13th month pay and other bonuses only up to P70,000.

DOF request

Recto said there was a request from the Department of Finance for the Senate to delay the passage of the bill until next year to allow the DOF to reach its target collection for 2014.
 
“There is a request from the executive na kung maaari wag this year at next year na. I think the Finance department... naturally kasi may mga target sila this year,” Recto said on why the bill couldn't be passed this year.
 
Senator Juan Edgardo Angara, chairman of the Senate Committee on Ways and Means, said Finance Undersecretary Jeremias Paul sent him an email in October asking him to defer his sponsorship speech on the proposed measure.
 
“He said they have a new study na hindi P30 billion pataas kundi P26 billion to P28 billion and revenue loss pag napasa yung batas. Ang sabi ko sa kanya, bakit ngayon lang yan dapat nung mga nakaraang hearing nyo pa yan ibinigay,” Angara said.
 
But Angara believes the new figure was still bloated as various experts from the University of the Philippines and other institutions said the revenue impact would only be P3 billion to P5 billion.

Preventing revenue loss
 
In Malacañang, Communications Secretary Herminio Coloma Jr. said the DOF wanted to prevent government revenue loss when it presented proposals to Congress on the tax cap on bonuses.
 
"Sa bawat pagkakataon ay iminumungkahi din nila [DOF officials] na tingnan ‘yung buong sistema ng pagbubuwis para hindi magkaroon ng anumang negatibong impact ito sa ating pananalapi," Coloma said at a separate press briefing on Thursday afternoon.
 
"Ang aking batid ay masinsin ang naging koordinasyon sa pagitan ng ehekutibo at lehislatura," he added.
 
Coloma said the executive branch would like to ensure "revenue neutrality" in considering the measures on tax caps on bonuses.
 
"Kailangang tingnan kung ano ‘yung itatadhana ng batas na ilalabas ng Kongreso at sa lahat ng pagkakataon ang sinisikap na matamo dito ay ‘yung sitwasyon na hindi mawawalan ng rentas internas ang ating pamahalaan," Coloma said.

Workers disappointed

Filipino workers have no choice but to tighten their belts this coming Christmas season, labor group Kilusang Mayo Uno (KMU) secretary-general Roger Soluta told GMA News Online by phone.
 
"Isang magandang balita sana kung mas maaga naisabatas ang panukalang itaas ang ceiling sa tax exemption sa bonus," he said.
 
"Ito na sana ang pagkakataon para magkaroon ng economic relief ang mga manggagawa... pero dito natin makikita ang pagiging manhid ng gobyern sa kalagayan ng ating manggagawa," Soluta added.
 
While there will be a delay, taxpayers will still have the upper hand if the law on tax exempt bonus is enforced next year, said Rina Manuel, president of Tax Management Association of the Philippines Inc. (TMAP)
 
"It would be best if the increase in tax-exempt bonus threshold could be effected this year so that individual taxpayers, who have long been burdened with high taxes, can already have some form of relief," she said.

Still a victory
 
"However, if ever they do decide to have it take effect in 2015 due to budget concerns, it will still be considered a victory for taxpayers. At least, we have achieved that first step towards tax reform," Manuel said.
 
The next big step would be to push for the other individual tax system reforms, which will have greater & more long-term impact, the TMAP official noted.
 
"The adjustment in tax brackets & the lowering of tax rates should then be enacted soon, coupled with the simplification of the tax system to expand the base," Manuel said.
 
In September, leaders of the House of Representatives and Senate have agreed to fast-track deliberations on a comprehensive tax reform bill that aims to ease the tax burden of the Filipino working class by 2016. 
 
The Philippines has the highest income tax rate among Southeast Asian countries at 32 percent.
 
At least three bills seeking to lower individual tax rates by as much as 15 percent have been filed at the House.  —with reports from Andreo Calonzo and Danessa Rivera/NB/KBK, GMA News

 

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