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Republic of the Philippines F
HOUSE OF REPRESENTATIVES \ | WATES MARL2 2028, y
‘Quezon City pines #
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EIGHTEENTH CONGRESS XS 3
First Regular Session
6611
HOUSE BILLNO.__—

Introduced by HONORABLE STELLA LUZ A. QUIMBO

EXPLANATORY NOTE

In the Philippine setting, senior citizens remain productive despite their age.
Based on the 2018 Labor Force Survey, there are about 9 million Filipinos who are at least 60
years old. About 40 percent of these seniors are still employed, of which 23 percent are self-
employed professionals, 11 percent are employed in the formal sector, and 6 percent work
within family businesses or private households. Hence, a significant number of senior
citizens continue to be productive and engage in economic activity.

Article XV of the 1987 Constitution provides it is the duty of the family to take
care of its elderly members while the State may design programs of social security
for them. In addition, Article XIII mandates the State to afford full protection to
labor, local and overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.

In line with promoting employment opportunities for senior citizens,
Congress enacted Republic Act No. 9257 or the Expanded Senior Citizen Act of 2003.
This provides for a tax incentive for private entities that employ senior citizens, in
the form of a deduction from gross income equivalent to fifteen percent (15%) of the
total amount paid as salaries and wages to senior citizens. However, such an
incentive is only available provided that the annual income of the senior citizen does
not exceed the current poverty level.

This bill seeks to increase the tax deduction for private entities who hire senior
citizens as employees, from fifteen percent (15%) to: (i) thirty percent (30%) of the total
amount paid as salaries and health benefits to senior citizens earning minimum wage,
and (ii) fifty percent (50%) of the total amount paid as salaries and health benefits to
senior citizens earning above minimum wage. This is cognizant of the fact that workers
with high salaries will also generate additional tax revenues for the government
through individual income taxes.

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Based on the author’s own computations, this policy measure will be at least tax
revenue neutral, and at most, tax revenue enhancing, given the estimated net changes
to corporate income tax revenues and individual income tax revenues.

In view thereof, the expedient approval of this bill earnestly sought.

(re

STELLA LUZ A. QUIMBO.
Representative
Second District, Marikina City

1 See attached technical annex.


[= [Elmated impact of Proposed incentives for Senior Emalowment
Proposed tax deduction n the gross income of private entities who hire senior employee, equivalent
'30% Percent ofthe amount spent on wages and health benefits of seniors that earn minimum wage
50% __Percent of the amount spent on wages and ditional health benefits of seniors that earn above minimum wage

ffect.on number of emploved seniors
“Assumption A Proposed incentives wil double the number of senior employees overall New hired seniors would not have been hired
without the given incentive.

‘Assumption B Assume newly hired seniors wilfolow the same income distribution ascurrenly employed seniors.
‘Assumption € _ For simplicity, taxable income is equal to annual income.

Fem Formula Value
() Total number of employed seniorsin private establishments 1 765,376]
() Additional sumber of employed seniors, after incentives under House Bill? (equa! toa) 765,976
(c) New total number of employed seniors, after incentives under House Bil (0+ b) 4531952
‘tfecton tox revenves

First, the proposed incentives will decrease corporate income tax revenues. The extent of the impact i estimated below for two types of
seniors: (1) minimum wage earners, and (2} earning above minimum wage.

“TYPE 1 Seniors earning minimum wage
‘Generally, rms wil hire workers the adaitional benefit tothe fim is at east as much as the con oT firing, AdATional

‘Assumption O11) revenue is equal tothe compensation of Type 1 seniors. Hence, change in gross income is ze.
fem Formula ae
(a) Proprion o minmum wage earners orang eG ® om
(e) Tota numberof dion seriors earring minimum wage 5 oa ss106
(f) Average wage per day of seniors earning minimum wage 6 P 370
(g) Total amount spent on wages of additional Type 1 seniors 7 en P  43,642,478,369
‘(h) Total amount spent on health benefits of additional Type 1 seniors # (20% of g) P  8,728,495,674
{0 Change incorporate ross income » ° °
G) Deduction in taxable income due to incentives 10 (30% of g+h) P (5.711.292.213)
(i) Loss in conporate income tax revenue ue to Type 1 hires 1 (G0xof) P_a7s3.30766a]
TPE Tenor earing stove wininam wage
Rasampton Da) The revere tat Firs wl gin rom hing adtoal Type 2 enor is 1.5x he compensation ofthe Type 7 senior
Formula Vole
@) Proportion of seniors earning above minimum wage 12 “41%
{) Number of adios seniors earning above minimum wage on 314050
(n) Average wage per day of seniors earning above minimum wage 14 P 821
{0} Total amount spent on wages of adtonal Type 2 enor is (mn) Per 2949%2.335
(p) Annual premium for health benefits of Type 2 seniors 16 P 35,000
(q) Total amount spent on health benefits of additional Type 2 seniors 17 (0%) P  10,991,755,600
(7) Net increase incorporate income it (so of ora) P 39163368967
(s) Deduction ntaabie income deo proposed incentives» 0% oforp) > (29363368:967]
| tossin corporate income tax revenve de to Type 2hires 2 20% of?) 4 |
‘Second the government stands to ain revenues rom the aestona india income txt be pid by the Type 2 hires
Tximated mamber | Etimoted tot Emotes
Tor brocket Tax owed =a ae z
Tadert —axeenet st a Te] :
Srcket 2 [2iwot excess income over 250,000 7sou0| 234585575), 932355 00
Bracket 3 [padoa0.s 25x of excess income aver 40,000 Base) 22498 90.165 2556233231
Bracket [p120000. 30% of excess ncome over 800,000 ‘ioq| ii 7eneat sis asi97 703
rackets _[pas0000 + 32% ot excess income ver P2miton Str] “2500837 73 eesoseit
[ational individual income tax revenves due to Type 7 hres a
INET EFFECT ON INCOME TAX REVENUES. [—r seon sss. |
Sa Tae aT RR A TS — OT
ramones foul te Toes Mat WIM rotons arm, tact enpone
nos 2a enpanane dex tr cman acmr cnpoan

str omuors compas autor cor cones



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. _ 86 u

Introduced by HONORABLE STELLA LUZ A. QUIMBO

AN ACT GRANTING TAX INCENTIVES TO PRIVATE ENTITIES WHO
EMPLOY SENIOR CITIZENS AS EMPLOYEES, AMENDING FOR THIS
PURPOSE REPUBLIC ACT NO. 7432, AS AMENDED, OTHERWISE KNOWN AS.
“AN ACT TO MAXIMIZE THE CONTRIBUTION OF SENIOR CITIZENS TO
NATION BUILDING, GRANT BENEFITS AND SPECIAL PRIVILEGES AND
FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 5 of Republic Act No. 7432 is hereby further amended to read as

follows:

XXX

“Private entities that will employ senior citizens as employees, upon the
effectivity of this Act, shall be entitled to an additional deduction from their
gross income, equivalent to fifteen THIRTY percent (45%) (30%) of the total
amount paid as salaries, and-wages, AND HEALTH BENEFITS to senior
citizens WHOSE WAGES DO NOT EXCEED THE CURRENT MINIMUM
WAGE, AND FIFTY PERCENT (50%) OF THE TOTAL AMOUNT PAID AS
SALARIES, WAGES, AND HEALTH BENEFITS TO SENIOR CITIZENS
WHOSE WAGES EXCEED THE CURRENT MINIMUM WAGE, subject to
the provision of Section 34 of the NIRC, as amended: Provided, however, That
such employment shall continue for a period of at least six (6) mont



SECTION 2. Eligibility. - The rates of deduction provided in Section 1 shall apply only
to seniors hired after the effectivity of the Act.

SECTION 3. Implementing Rules and Regulations. — Within sixty (60) days from the
effectivity of this act, the Department of Labor and Employment and the Department
of Trade and Industry shall formulate and adopt amendments to the existing rules
and regulations implementing Republic Act No. 7432, as amended by Republic Act
No. 9257 and Republic Act No. 9994, to carry out the objective of this Act.

SECTION 4. Separability Clause. — If any provision of this Act is declared
unconstitutional or invalid, the remainder of the provisions thereof not affected shall

remain in force and effect.
SECTION 5. Repealing Clause. — All laws, decrees, orders, rules, regulations,
ordinances or parts thereof which are inconsistent with this Act are hereby repealed

or modified accordingly.

SECTION 5. Effectivity Clause. ~ This Act shall take effect fifteen (15) days upon its
publication in at least two (2) newspapers of general circulation.

Approved,