Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

4464

House Bill No.

Introduced by REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

This bill seeks to amend the National Internal Revenue Code (NIRC) of 1997, as
amended, to increase to P70,000 from the present P30,000 the ceiling of the 13th month
pay, Christmas bonus and other benefits excluded from the computation of the gross
income for purposes of income taxation to increase low-wage camer Filipinos’
purchasing power and an opportunity to improve their quality of life.

The current Thirty thousand pesos (P 30,000.00) ceiling is embodied in Republic
Act No. 8424 enacted in 1997 when the Consumer Price Index (CPI), used to index the
real value of wages in relation to inflation, was merely 60. Today, the CPI is at least 137.
Thus, the amount of current exemption is way off the line considering the geometric
increases in inflation and the depreciation of the peso’s real value through time.

In December 2013,

inflation rate in the Philippines accelerated to 4.1%, the
highest rate since 2011, as all commodity prices recorded higher annual increases. The
Consumer Price Index (CPI) indicates that a basket of goods worth P 100,00 in 1998 is
now worth P 200.00 by the end of 2013, almost doubling in a span of 15 years.

On the other hand, wages have always lagged behind. Recently, the minimum
wage rate in Metro Manila has been increased to P 466.00 a day, Still, a
minimum daily cost of living of P 1,200 a day for a family of 6 members.

The fact however, is that while private enterprises have a social responsibility to
ensure that their workers are properly compensated, they also have to struggle with the
financial requirements of their undertakings to remain afloat, Thus, it would be very
difficult to ask for more impositions on these companies, most especially the micro to
small enterprises that make up the vastness of employers nationwide.

A solution would be for the government to be the one to make the sacrifice.

Yet still, this measure would only amount to a very minute sacrifice, While it is
true that the passage of this proposed measure will entail less income tax collections on
the part of the government, such foregone revenues ate more apparent than real. In
actuality, such apparent losses are merely the same amounts the government was willing
to give our workers as exemptions in 1997. The amendment only seeks to respond to
current economic realities. Moreover, the foregone tax collections can be recouped by the
government in the long-run through increased expenditures of the people and pump-
priming cash flow to the economy in the process.



Section 9 of Article II of the 1987 Constitution mandates the State to promote a
just and dynamic social order that will free the people from poverty through policies that
promote a rising standard of living and an improved quality of life for all Filipinos. This
measure aims to fulfill that obligation of the State,

For the foregoing reasons, the immediate consideration and approval of the bill is
earnestly urged.

ARTHUR C. YAP
Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS

Housé Bill No.

Introduced by REPRESENTATIVE ARTHUR C, YAP

AN ACT

INCREASING THE TAKE HOME PAY OF LOW-WAGE
WORKERS BY ADJUSTING THE 13TH MONTH PAY AND
OTHER BENEFITS CEILING EXCLUDED FROM THE
COMPUTATION OF GROSS INCOMEFOR PURPOS OF
INCOME TAXATION, AMENDING FOR THE PURPOSE
SECTION 32 (B) OF THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines inCongress
assembled.


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SECTION 1. Section 32 (B), Chapter VI of Republic Act No. 8424, otherwise
known as the Internal Revenue Code of the Philippines, is hereby amended to read as
follows:

Section 32. Gross Income -

(B)Exclusions From Gross Income, - ‘The following items shall not
be included in gross income and shall be exempt from taxation under
this title:
XXX
(7) Miscellaneous items -
XXX
(c) 13 Month Pay and Other Benefits - Gross benefits
received by officials and employees of public and
private entities: Provided, however, That the total
exclusion under this paragraph shall not exceed
SEVENTY thousand pesos (P70,000.00) which shall

cover:

(iv)Other benefits such as productivity incentives
and Christmas bonus: PROVIDED, THAT NOT
LATER THAN THREE (3) YEARS AFTER
THE EFFECTIVITY OF THIS ACT AND
EVERY THREE (3) YEARS THEREAFTER,
THE AMOUNT HEREIN STATED SHALL
BE ADJUSTED TO ITS PRESENT VALUE

USING THE CONSUMER PRICE INDEX


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(CPI) AS PUBLISHED BY THE NATIONAL
STATISTICS OFFICE (NSO).”

SECTION 2. Implementing Rules and Regulations - The Department of

Finance (DOF) with the assistance of the Bureau of Internal Revenue (BIR) shall
promulgate the rules and regulations necessary for the effective implementation of this
Act not later than thirty (30) days from the effectivity of this Act.

SECTION 3. Separability Clause. - If any of the provisions of this Act is
declared invalid or unconstitutional, the remaining parts or provisions hereof not affected
thereby shall remain in full force and effect.

SECTION 4. Repealing Clause. - All laws, decrees, executive orders,

proclamations, rules and regulations, and issuances, or parts thereof, inconsistent with the

provisions of this Act are hereby repealed or modified accordingly
SECTION 5. Effectivity Clause. - This Act shall take effect fifteen (15) days
after its publication in at least two (2) national newspapers of general circulation.

Approved.