FOLLOWING the recent signing into law of the bill raising the tax- exemption cap for 13th-month pay and other bonuses into a law, one of the principal authors of the law urged the Aquino administration to immediately issue its implementing rules.
Party-list Rep. Antonio Tinio of ACT Teachers, one of the authors of Republic Act 10653 in the House of Representatives, said the administration, through its finance and tax chiefs, to immediately issue implementing rules for the new law, which increases the ceiling on tax-exempt bonuses from P30,000 to P82,000.
Tinio said its benefits need to be felt by the people, especially low- and middle-income earners, as soon as possible. He added that the law will “enable lower-and middle-income earners to take home to their families more of their hard-earned money.” “We hope that the Department of Finance [DOF] will not drag its feet in issuing the implementing rules,” Tinio said, noting that the DOF and the Bureau of Internal Revenue had vehemently opposed the measure.
“The DOF and the BIR should no longer complain about revenue loss. There will be no revenue loss in the long run because we’ll only be giving the people more of the income that they rightfully earn, and, in turn, they will have more to spend for their families. Greater spending power for the majority of the people will be good for the economy as a whole,” he said.
Also, Libertal Party Rep. Romero Quimbo of Marikina, chairman of the House Committee on Ways and Means and coauthor of the law, said that, as early as June 2015, when half of the 13th-month pay is released, teachers, soldiers, ordinary rank-and-file employees all the way to middle-level management employees will be able to enjoy bigger bonuses.
The law that was ratified by both houses of Congress in December, covers the tax exemption for the 13th-month pay, Christmas bonus and other bonuses received by employees every year. It also allows employees in the public and the private sectors to take home a larger share of their bonuses.
Earlier DOF officials warned that raising the tax exemption cap on bonuses would result in revenue loss to the government of about P30 billion per year. But other experts said any revenue loss would be just P3 billion.
Income tax
MEANWHILE, after passing the law on raising the tax exemption on bonuses, Quimbo said the House is now gearing up for deliberations on income-tax reform, which is envisioned to simplify the tax structure, adjust the brackets to inflation and reduce tax rates.
“The President recognizes the importance of having more tax reform measures benefitting the middle class, especially the salary and wage earners, with direct impact on the earnings they receive every month. So these are all forthcoming,” Quimbo said. He said the House Committee on Ways and Means is finalizing the substitute bill on income-tax reforms, which is likely to be approved on second reading before Congress goes on recess on March 20. But, according to Finance Undersecretary Jeremias Paul Jr., the bill reducing the individual income-tax rates, which included to the top priorities of the lower chamber—may cause the government to lose revenues totaling as much as 1.5 percent of the country’s gross domestic product or P30 billion.