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HOUSE OF REPRESENTATIVE:
Quezon City

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17" Congress
First Regular Session

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HOUSE BILL nol326 |

Introduced by Representative WESLIE T. GATCHALIAN

EXPLANATORY NOTE

The National Internal Revenue Code of the Philippines provides personal
exemptions for individual taxpayer. “Personal exemptions are the theoretical
personal, living and family expenses of an individual allowed to be deducted from
the gross or net income of an individual taxpayer. These are arbitrary amounts
which have been calculated by our lawmakers to be roughly equivalent to the .
minimum of subsistence, taking into account the personal status and additional
qualified dependents of the taxpayer” (Pansacola vs. Commissioner of internal
Revenue, GR No. 159991).

Accordingly, personal exemptions are specific monetary exemption claimed
by an individual taxpayer as deduction due to personal, living and family expenses
from the gross income of the taxpayer to arrive at a taxable income.

At present, under R.A. 9504 which was enacted into law last June 2008, the

allowance for personal exemptions are as follows:

1. Fifty thousand pesos (P50,000) for each individual taxpayer, and
for married individual, only the spouse who is an income earner
can avail of the exemption.

2. Additional exemption of Twenty-five thousand pesos (25,000) for
each dependent not exceeding four (4) which can only be claimed
by one of the spouses for married individuals.

It is now six (6) years since R.A. 9504 was enacted and without doubt, the
amount prescribed as personal exemptions are no longer reflective of actual cost


of living. It is already outdated because the adjustments considered the poverty
threshold level six (6) years ago.

Also, our constitution provides that our taxation must be equitable and
progressive. Our constitution therefore sets the limitation in the exercise of
taxation when it chooses to adopt a progressive system which is a way to lessen
economic imbalance due to unequal income.

This bill therefore seeks to ease the burden of low income earners as a tax
relief that reduces the amount of tax due because of a reasonable deductions
from family and living expenses.

The bill will also raise the level of tax exemption according to present
expenditure realities and give financial breaks to individuals in need.

Foregoing considered, the immediate passage of this bill is earnestly
sought

Representa
1" District, Valep



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

17" Congress
First Regular Session

HOUSE BILLNO. 1826 _

Introduced by Representative WESLIE T. GATCHALIAN

AN ACT
INCREASING THE ALLOWANCE FOR PERSONAL
EXEMPTIONS OF INDIVIDUAL — TAXPAYERS,
AMENDING SECTION 35 OF REPUBLIC ACT NO. 8424,
AS AMENDED OTHERWISE KNOWN AS THE
NATIONAL INTERNAL REVENUE CODE OF 1997.

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

SECTION. 1. Section 35(A) and (B) of Republic Act No. 8424, as amended,
otherwise known as the National Internal Revenue Code of 1997, is hereby
amended to read as follows:

"SEC. 35. 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 allowed a basic personal exemption
amounting to One Hundred thousand pesos (P'100,000) for each individual
taxpayer.

"In the case of married individual where only one of the spouses is deriving
gross income, only such spouse shall be allowed the personal exemption

"(B) Additional Exemption for Dependents. - There shall be allowed an
additional exemption of Fifty thousand pesos (50,000) for each dependent
not exceeding four (4).


“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 gainfully employed or if such dependent, regardless
of age, is incapable of self-support because of mental or physical defect.

SECTION. 2. Separability Clause. - If any provision of this Act is declared invalid or
unconstitutional, other provisions hereof which are not affected thereby shall

continue to be in full force and effect.

SECTION 3. Repealing Clause.- Any law, presidential decree or issuance,

executive order, letter of instruction, administrative order, rule or regulation
contrary to or inconsistent with any provision of this Act as hereby amended or

modified accordingly.

SECTION. 4. Effectivity Clause. - This Act shall take fifteen (15) days following its
publication in the official Gazette or in at least two (2) newspaper of general

circulation.

Approved,