13" CONGRESS OF THE REPUBLIC ) 
First Regular Session 
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OF THE PHILIPPINES 
S E N A T E  
S. BILL NO. 
19 2 '11 
Introduced by Senator Ralph G. Recto 
Explanatoty Note 
The proposals to impose additional taxes - the lifeblood of government - mostly in 
the form of consumption taxes, will greatly affect the personal disposable income of the 
majority of Filipinos. As the 2000 Family Income ,and Expenditure Survey (FIES) show 
that 13.25 million or 86% of the total number of Filipino families, mostly mxge earners and 
salaried workers, have gross annual income of less than 22250,000.00. 
Under the current income tax iegime, an individual earning compensation income 
has to set aside for payment of their income tax liability at least five percent (5%) to as high 
as thirty-two percent (32%) of their income, net of the allowable personal exemptions and 
mandatory social security payments. 
So that an individual with a net income of 4 250,000 shall be subject to 25% income 
tax equivalent to P50,OOO.OO. Hence, an average family of six could only spend 4200,000.00 
annually for its total family expenditures on food, clothing, education, health, housing and 
transportation, among others. 
In order to provide much needed relief to these income earners, this bill proposes to 
reduce the tax rates on their incomes by thitty percent (30%). This wiU result in an increase 
of their take-home pay by making available to them a higher disposable income which is 
otherwise withheld by government. 
It also seeks to mitigate the effects of the government's proposals to impose 
additional taxes which will be borne by and large bythe middle and lower classes. 
W i e  this proposal will likely cost the government foregone revenues annually, it 
will s t i  be a &-win 
situation for the government in the long run. 
More money in 
taxpayer's pocket wilt boost consumer spending which in turn trigger demand for more 
goods and services and thereby stimulate activities in the industrial and service sectors. 
In view of the foregoing, immediate approval 
rnestly sought. 


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13TH CONGRESS OF THE REPUBLIC ) 
First Regular Session 
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OF THE PHILIPPINES 
S E N A T E  
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Introduced by Senator Ralph G. Recto 
AN A a  
REDUCING RATES OF INCOME TAX ON INDIVIDUAL CITIZEN AND 
INDIVIDUAL RESIDENT ALIEN OF THE PHILIPPINES, AMENDING FOR 
THE PURPOSE SECTION 24(A)(l)(c) OF THE NATIONAL INTERNAL 
REVENUE CODE, AS AMENDEDANDFOROTHERPWOSES 
Be it enacted bJi the Senate and the House @Representatives oftbe Pbihppines in Congress asembhk 
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“SEC. 24. Income TmRafes- 
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Pbihppines. - 
SECTION 1. Chapter 111, Section 24, Subsection (A), Paragraph (c) of Presidential 
Decree No. 1158, as amended by, among others, Presidential Decree No. 1994, Executive 
Order No. 273, and Republic Act No. 8424, other wise known as the National Internal 
Revenue &de, is hereby further amended to read as follows: 
“(A) Rates of Income T m  on Imiividual Cifi@n and Ind.iriual Redent A h  ofthe 
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“(1) An income tax is herebyimposed: 
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“(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 PhiIippines byevery 
individual citizen of the Philippines residing therein; 
“(b) 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 hereof; and 
“(c) On the taxable income defined in Section 31 of this Code, other than 
income subject to tax under Subsections (B), (Q and (D) of this Section, derived for 
each taxable year from all somes within the Philippines by an individual alien who is 
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a resident of the Philippines. 


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“The tax shall be computed in accordance with and at the rates established in 
the following schedule: 
“Not over P10,OOO. .................... 
.3.5% [5%] 
“Over P10,OOO but not over P30,OOO ....... e350 + 7% [P500+10%] of 
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the excess overP10,oOO 
“Over P30,OOO but not over P70,OOO ...... P.1,750 + 10.5%[P2,500 +15%] 
of 
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excess 
over P30,OOO 
“Over P70,OOO but not overP140,OOO. ...... B5,950 + 14% [P8,500+20%] 
of the excess over P70,OOO 
“Over P140,OOO but not over P250,OOO ..... P.15,750 + 17.5% [P22,500 + 
25%] of the excess over 
P140,OOO 
“Over P250,OOO but not over P500,OOO .... B35,000 [P50,000] +30% of 
the excess over P250,OOO 
“OverP500,OOO. .................... 
8110,000 + 32% [P125,000 + 
34%] of the excess over 
P500,OOO [in 19981 
[“Provided, That effective January 1, 1999, the top marginal rate shall be 
thii-three (335) and effective January 1, 2000, the said rates shall be thirty-two 
(32%).] 
“For married individuals, the husband and wife, subject to the provision of 
Section 51 @) hereof, shall compute separatelytheir individual income tax based on 
their respective total taxable income: l’mvided 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.” 
SEC 2. The Secretary of Finance, upon recommendation of the Commissioner of 
Internal Revenue, shall promulgate the necessary rules and regulations for the effective 
implementation of the provisions of this Act. 
SEC. 3. This Act shall take effect upon its approval. 
Approved,