Tax-free 13th month pay cap raised to P90,000

MANILA, Philippines — The amount of tax-free 13th month pay has been raised to P90,000 while the excise tax tiers on sugar-sweetened beverages have been reduced in the proposed Tax Reform for Acceleration and Inclusion (TRAIN) as the Senate and the House of Representatives continue to make compromises to have the spending measure ratified before Congress adjourns next week.

The bicameral conference committee has agreed to increase the tax exemption cap of the 13th month pay and other bonuses from the current P82,000 to P90,000 as a compromise to the House contingent’s insistence of a P100,000 tax-exempt ceiling.

Sen. Sonny Angara, chairman of the Senate ways and means committee, said the panel also agreed to reduce to two tiers the excise taxes on sugar-sweetened beverages or six percent per liter for beverages with caloric and non-caloric sweeteners and P12 for those with high fructose corn syrup.

The bicameral conference committee – the panel composed of contingents from the Senate and the House tasked to reconcile conflicting provisions of the versions of the TRAIN passed by the two chambers – is scheduled to hold its fourth and final meeting today to hammer out a final version of the tax bill.

“We’re about 85- to 90-percent finished or down to about five to seven or 10 provisions that we need to reconcile, and after that, we’re OK,” Angara said in a telephone interview.

He said the meeting in Makati City will be “not only behind closed doors, but the doors will also be locked.”

“It’s hard to manage with more than 100 people in the room. The (Department of Finance) has at least 30 people in the meeting,” the senator said.

The TRAIN, which President Duterte certified as urgent and is scheduled to be ratified on Monday, is supposed to generate P130 billion in fresh revenues to fund the administration’s infrastructure program.

Senate President Pro Tempore Ralph Recto, however, pointed out that the bill has many provisions hitting the classes D and E of the population, prompting lawmakers to propose earmarks for social protection programs.

“If we put too many earmarks for social protection, what will be left for infrastructure? Why don’t we just remove the provisions that hit the poor?” Recto said.

Among the contentious provisions that have yet to be resolved are the excise taxes on coal, mining and cosmetic surgeries for aesthetic purposes.

The Senate version imposed a staggered increase in the excise tax on coal from P10 to P300 per metric ton over the next three years. The chamber also doubled the excise taxes on minerals, mineral products and quarry resources, and imposed a 10-percent levy on aesthetic cosmetic procedures.

The provisions are not in the House version. Sources said Sen. Loren Legarda was willing to compromise on the drastic increase in coal tax, which she authored.