THIRTEENTH CONGRESS OF THE REPUE3LIC ) 
OF THE PHILPPLNES 
) 
FIRST REGULAR SESSION 
1 
S E N A T E  
S. B. NO. 
d 
Introduced by SENATOR LUISA “LOT” P. EJERCITO ESTRADA 
EXPLANATORY NOTE 
The Constitution, Article 2, Section 5 expressly provides that “the promotion of 
the general welfare is essential for the enjoyment by all people of the blessings of 
democracy. ” 
Towards this end, the government is mandated to pursue economic policies and 
programs that shall truly ameliorate the living conditions of the people, which can be 
done by according the public the opportunity to participate in critical decision-making 
processes, on one hand, and making them the centerpiece of any development initiatives, 
on the other. 
Unfortunately, the government fails to do these. 
In the area of revenue generation, for instance, the government rarely represents 
the public in programs development and even worse, passes the burden of revenue 
collection to the hapless average citizens. 
Considering the country’s presently dwindling and crippling economy, 
exacerbated by huge budget deficits, it is surprising that the current government remains 
lax in going aRer erring businessmen and corporations, which rob the national coffers of 
trillions of pesos through their tax evasion schemes, while being strict in enforcing 
income tax payment from the average working people. 
Such a malady makes life more difficult to the average Juan Dela Cmz, who is 
forced to doubly work hard to make both ends meet. With a meager income, 75% of 
which is allocated for food provisions, he can hardly meet the demands of daily living, as 
he is even compelled to remit a considerable amount of money to the treasury in the form 
of-income tax. 
The proposed measure seeks to pursue equitable tax burden distfibutions and 
provide tax relief to the disadvhtaged sector, who suffers most amidst our economic 
turmoil. Specifically, it seeks to reduce the income tax rates of individual taxpayers and 
grant income tax payment exemption to certain minimum wage earners. 
Indeed, justice requires that those who have less be prioritized in legislative 
administrative concerns, while those who have more be made to share with the 
government in carrying the burdens, necessitated by existing economic predicaments. 


If the country is to chart its course towards growth and development, the 
government should accord the public opportunity to cope with current financial 
difficulties and run after economic saboteurs, disguised as legitimate business individuals 
and entities. 
Hence, the immediate passage of this bill is earnestly sought. 
LUISA “LOI” @. EJERCITO ESTRADA 
Senator 


THIRTEENTH CONGRESS OF 
OF THE PHILIPPINES 
FIRST REGULAR SESSION 
Introduced by SENATOR LUISA “LOI” P. EJERCITO ESTRADA 
AN ACT 
REDUCING THE INCOME TAX RATES OF INDIVIDUAL TAXPAYERS, AND 
GRANTING TAX PAYMENT EXEMPTION TO CERTAIN MIMMIJM WAGE 
EARNERS 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. - This Act shall be known as the “Tax Payment 
Exemption Act.” 
SECTION 2. Declaration of Policy. - It is hereby declared to be the policy of 
the State to protect and promote the interest of Filipino taxpayers, through sponsorship of 
programs and enactment of measures that shall truly ameliorate their living conditions, 
and afford them the capability to meet the demands of daily living. 
SECTION 3. Rate Schedule. 
- 
Chapter 111, Section 24 (A) (1) (c) of 
the National Internal Revenue Code of 1997, as amended, is hereby hrther amended to 
read as follows: 
“CHAPTER 111 
- 
TAX ON INDIVIDUALS 
SECTION 24. Income Tax Rates. - 


(A) 
Rates of Income Tax on Individual Citizen and Individual Resident Alien 
of the Philippines. - 
(1) 
An Income Tax is hereby imposed: 
(a) 
On the taxable income defined in Section 31 of this Code, 
other than income subject to tax under Subsections (B), (C) 
and (D) of this Section, derived for each taxable year from 
all sources within and without the Philippines by every 
individual citizen of the Philippines residing therein; 
On the taxable income defined in Section 31 of this Code, 
other than income subject to tax under Subsections (B), (C) 
and (D) of this Section, derived for each taxable year from 
all sources within the Philippines by an individual citizen 
of the Philippines who is residing outside of the Philippines 
[including overseas contract workers referred to in 
Subsection (C) of Section 23 hereofl; and 
On the taxable income derived in Section 3 1 of this Code, 
other than income subject to tax under Subsections (B), (C) 
and (D) of this Section, derived for each taxable year from 
all sources within the PhiIippines by an individual alien 
who is resident of the Philippines. 
(b) 
(c) 
The tax shall be computed in accordance with and the rates 
established in the following schedule: 
[5%] Exempted 
[IO%] 5% ofthe excess over 
Pl0,OOO 
Not over P10,OOO 
--__---------- 
Over P10,OOO but not over P30,OOO ------ 


Over P30,OOO but not over P70,OOO ------- [p2,500] 
1,250 + [15%] 
7.5% of the excess over 
P30,OOO 
[P8,500] 4,250 + [20%] 10% 
of the excess over P70,OOO 
Over P70,OOO but not over P140,OOO ------ 
Over P140,OOO but not over P250,OOO ------ [P22,500] 11,250 + (25%] 
12.5% of the excess over 
P 140,000 
Over P250,OOO but not over P500,OOO ------ [PSO,OOO] 25,000 +[30%] 
15% 
of the excess over 
P25 0,000 
Over P500,OOO BUT NOT OVER Pl,OOO,OOO ---- [P125,000] 62,500 + 
[34%] 17% of the excess 
over P500,OOO [in 19981 
OVER Pl,OOO,OOO BUT NOT OVER P2,000,000 --- P125,OOO + 20% 
OF THE EXCESS OVER 
P1,000,000 
OVER P2,000,000 
------ P250,OOO $. 32% OF THE 
EXCESS OVER P2,000,000 
[Provided, That effective January 1, 1999, the top marginal rate shall be thirty- 
three (33%) and effective January 1, 2000, the said rate shall be thirty-two percent 
(32%).] 
For married individuals, the husband and wife, subject to the provision of Section 
51 (D) hereof‘, shall compute separately their individual income tax based on their 
respective total taxable income: Provided, That if any income cannot be definitely 
attributed to or identified as income exclusively earned or realized by either of the 


spouses, the same shall be divided equally between the spouses for the purpose of 
determining their respective taxable income.” 
SECTION 4. Exemption. - Section 35 (A) and (B) of the National Internal 
Revenue Code of 1997, as amended, is hereby amended to read as follows: 
“SECTION 3 5. 
Allowance 
of 
Personal 
Exemption 
for 
Individual 
Taxpayer. - 
(A) 
In General. - For purposes of determining the tax provided in Section 
24(A) of this Title, there shall be aIIowed a basic personal exemption as 
follows: 
For single individual or married individual 
judicially decreed as legally separated 
with no qualified dependents 
--------- 
[P20,000] P50,OOO 
For head of family 
---------- 
[P25,000] P55,OOO 
For each married individual 
---------.. 
Cp32,OOOI P60,OOO 
In the case of married individuals where only one of the spouses is deriving gross 
income, only such spouse shall be allowed the personal exemption. 
For purposes of this paragraph, the term “head of the family’’ means an unmarried 
or legally separated man or woman with one or both parents, or with one or more 
brothers or sisters, or with one or more legitimate, recognized natural or legally adopted 
children living with and dependent upon him for their chief support, where such brothers 
or sisters or children are not more than twenty-one (21) years of age, unmarried and not 
gainhlly employed or where such children, brothers or sisters, regardless of age are 
incapable of self-support because of mental or physical defect. 


(€3) 
Additional Exemption for Dependents. - 
There shall be allowed an 
additional exemption of [Eight Thousand Pesos (PS,OOO)] FIFTEEN 
TEtOUSAND PESOS (P15,OOO) for each dependent not exceeding four 
(4) ; PROVIDED, HOWEVER, THAT ON THE THIRD ( 3 9  YEAR 
OF IMPLEMENTATION OF 
THIS ACT, THE ADDITIONAL 
EXEMPTION HEREIN PROVlDED S U L L  BE ALLOWED FOR 
EACH DEPENDENT NOT EXCEEDING THREE (3); AND ON 
TEE 
FOURTH 
(4TH) YEAR 
OF 
IMPLEMENTATION, 
ADDITIONAL EXEMPTION SHALL BE ALLOWED FOR EACH 
DEPENDENT NOT EXCEEDING TWO (2). 
The additional exemption for dependents shall be claimed by only one of 
the spouses in the case of married individuals. 
In the case of legally separated spouses, additional exemptions may be 
claimed only by the spouse who has custody of the child or children: Provided, 
That the total amount of additional exemptions that may be claimed by both shall 
not exceed the maximum additional exemptions herein allowed. 
For purposes of this Subsection, a “dependent” means a legitimate, 
illegitimate or legally adopted child chiefly dependent upon and living with the 
taxpayer if such dependent is not more than twenty-one (21) years of age, 
unmarried and not gainfblfy employed or if such dependent, regardless of age, is 
incapable of self-support because of mental or physical defect. 
SECTION 5. Separability Clause. - 
If any provisions of this Act is 
declared invalid or unconstitutional, other provisions hereof which are not affected 
thereby shall continue to be in 111 force and effect. 


SECTION 6. Repealing Clause. - All provisions of laws, orders, decrees, 
including rules and regulations inconsistent herewith are hereby repealed or modified 
accordingly. 
SECTION 7. Effectivity Clause. - 
This Act shall take effect fiReen (15) 
days following its publication in the Official Gazette or at least two (2) national 
newspaper of national circulation. 
Approved,