MANILA, Philippines - The Senate on Wednesday approved on third and final reading a bill hiking the tax exemption ceiling of private and public employees' bonuses from P30,000 to P82,000.
Senate Bill 2437, which was authored by Sens. Sonny Angara and Ralph Recto, received 14 affirmative votes with no abstention and negative votes.
Angara said employees receiving 13th-month pay, Christmas bonuses and other benefits not exceeding P82,000 will be exempted from tax. The House of Representatives passed its own version of the bill in September.
He noted that the proposed P75,000 tax exemption ceiling was raised to P82,000 upon Recto's suggestion during plenary deliberations.
Angara said Recto's amendment was accepted because his proposed tax exemption ceiling was the same figure given by Bureau of Internal Revenue Commissioner Kim Hernares during one of the hearings on the measure.
"She (Henares) said that P30,000 in 1994 would be worth around P82,000 today," said Angara, chair of the Senate Committee on Ways and Means.
Senate President Franklin Drilon concurred with the adjustment of the tax exemption ceiling, saying that the bill's passage is necessary "to provide relief to state and private workers whose purchasing power has been shrinking for years due to inflation, but still have had to deal with the consequences of an outdated law."
Angara explained that the P30,000 tax ceiling had not been adjusted in 20 years. Recto, meanwhile, said the peso had lost two-thirds of its value over the same period.
Angara had included a provision that will require the tax ceiling to be adjusted every three years to coincide with major surveys conducted by the Philippine Statistics Authority such as the Family and Income Expenditure Survey.
Drilon also introduced an amendment ensuring the implementation of the law even if the finance secretary fails to promulgate the necessary rules and regulations.
"This is because it is up to the Department of Finance and the Bureau of Internal Revenue to come up with the implementing rules and regulations when this law is passed, and they may not have enough time to accomplish that in time. But surely, the law will be fully implemented next year," the Senate leader noted.
Drilon had said that the measure may not be implemented this year due to time constraints.
The bill is expected to benefit about half a million employees.