AS REPRE

> Receiven
one, OF WL 20138

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

of
House Bill No, 228

Introduced by
ACT TEACHERS Party-List Representative Antonio L. Tinio

EXPLANATORY NOTE

The 1987 Constitution recognizes labor as a primary socio-economic force and affirms the
mandate of the State to protect the rights of workers and promote their welfare (Article II,
Section 18).

Despite this, the majority of salary- and wage-earners in the private and public sectors suffer
from indecently low pay and meager benefits. With respect to employees in the civil
service, their salaries oftentimes stagnate for long periods due to the failure of Congress to.
periodically amend the Salary Standardization Law. Workers in the private sector, on the
other hand, have their wages tied to the politics and bureaucracy associated with the wages
and productivity boards.

This misery on wages is compounded by the present income taxation law.

Even without considering the unrestrained inflation in prices of basic commodities and
services, salary increases are hardly felt by employees in the public and private sectors.
Whether the increases are caused by salary upgrading in a few agencies of the government,
the implementation of the Salary Standardization Law 3, or regional wage hikes, the taxable
incomes of employees also increase, and most of them become subject to higher tax rates.
Furthermore, the 13" month pay and other benefits, generally based on the basic pay, also
increase. In most cases, the P30,000 ceiling for the total exclusion of these benefits applies,
thus subjecting the excess of P30,000 to income tax.

One reason for this is that the National Internal Revenue Code (NIRC) and related revenue
regulations have not kept pace with increases in compensation levels in the public and
private sectors, as in the case of the P30,000 ceiling.


This bill proposes the raising to P60,000 of the ceiling for the total exclusion from gross
income of the 13 month pay and other benefits. Such legislative action is necessary to
enable employees to have more of their income to take home to their families.

Immediate approval of this bill is therefore sought.

ANTOMHO L. TINIO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No.

Introduced by
ACT TEACHERS Party-List Representative Antonio L. Tini

AN ACT

INCREASING THE CEILING FOR THE TOTAL EXCLUSION FROM GROSS INCOME OF 13™

MONTH PAY AND OTHER BENEFITS TO SIXTY THOUSAND PESOS, AMENDING FOR THE
PURPOSE SECTION 32 (B)(7)(E) OF THE NATIONAL INTERNAL REVENUE CODE

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

SECTION 1. Section 32 (B)(7)(e) of the National Internal Revenue Code is hereby amended
to read as follows:

“SECTION 32. (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
“(e) 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 shalll not exceed [Thirty Thousand Pesos (P30,000)]
SIXTY THOUSAND PESOS (P60,000) which shall cover:

XxX
“(iv) Other benefits such as productivity incentives and Christmas bonus: Provided,
further, That the ceiling of [Thirty thousand Pesos (P30,000)] SIXTY THOUSAND

PESOS (P60,000) [may] SHALL be increased through rules and regulations issued by
the Secretary of Finance, upon ANNUAL REVIEW AND recommendation of the


Commissioner AND UPON CONSULTATION WITH THE LABOR SECTOR IN THE
PRIVATE AND CIVIL SERVICE, after considering among others, the effect on the same
of the inflation rate at the end of the taxable year.”

SECTION 2. Repealing Clause. All |aws, decrees, resolutions, orders, or ordinances or parts
thereof inconsistent with this Act are hereby repealed, amended or modified accordingly

SECTION 3. Effectivity. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in one newspaper of general circulation.

Approved,