Quezon City – Representative Jerry Treñas of the lone district of Iloilo City wants to increase the tax exemption threshold for 13th month pay and other bonuses from the existing Php30,000 to Php75,000. In his House Bill 3670, Treñas seeks to increase the amount of tax exempt bonuses for all employees in both the private and public sector. It also mandates the Finance Department and the Bureau of Internal Revenue to increase the threshold every three years based on the consumer price index and inflation.
The House Committee on Ways and Means initially discussed HB 3670 and other house measures seeking to promote social justice by increasing the tax exemption of bonuses. It was observed that although the DOF and the BIR are empowered by the National Internal Revenue Code to increase the tax exemption ceiling, the bonus tax exemption stayed stagnant at Php30,000 since the exemption was introduced in 1997, which according to Treñas is too low given the rate of inflation and the rising cost of living.
“With the unabated rise of food, housing, education, electricity, water and transportation expenses, the 13 month pay and other benefits are no longer mere “bonuses”, as these are necessities relied upon by our countrymen as sources of income to support their families,” said the Iloilo City Representative. Treñas also noted that the country’s best tax payers are the employees who have no choice but to pay their monthly taxes through the withholding tax system of our country. Yet they are the ones who are most burdened by the government for even their 13 month pay and other benefits are only exempt from taxes for only up to a certain extent.