First Regular Session ) SENATE S. No. ________ Introduced by Senator Ralph G. Recto Explanatory Note Section 9, Article II of our Constitution states that: The State shall promote a ust and dynamic social order that !ill ensure the prosperity and independence of the nation and free the people from po"erty throu#h policies that pro"ide ade$uate social ser"ices, promote full employment, a risin# standard of li"in#, and an impro"ed $uality of life for all.% Corollary to this, it is also the State&s policy to affirm labor as a primary social economic force by protectin# the ri#hts of !or'ers and promote their !elfare. (ecause of these policies, our la!s e)clude the mandated *+th month pay and the Christmas bonus from the co"era#e of income ta)es, but only up to the e)tent of Thirty Thousand ,esos -,+.,....../ only. 0ther!ise, the e)cess !ould form part of an indi"idual&s #ross income and !ould be subect to the income ta). Specifically, Section +1 -(/ -2/ -e/ of the 3ational Internal Re"enue Code, as amended e)cludes from the income ta) the benefits found under ,residential 4ecree 3o. 56* as amended by 7emorandum 0rder 3o. 15 or the *+th month pay la!8 Republic Act 3o. 9959 or the la! authori:in# the #rant of Christmas bonus to national and local #o"ernment officials and employees8 and other benefits such as producti"ity incenti"es and other Christmas bonuses to the e)tent of ,+.,...... only. ;o!e"er, the amount set in our Ta) Code as the ceilin# for the said ta) e)emption does not mirror pre"ailin# circumstances. The ceilin# of ,+.,...... for the e)emption does not apply today as it did !hen it !as incorporated in the Ta) Code. This bill therefore aims to increase that ceilin# to Si)ty Thousand ,esos -,9.,....../, or appro)imately the e$ui"alent amount of ,+.,...... today ta'in# into consideration inflation and other factors. 4ata from the 3ational Statistics 0ffice illustrates that the purchasin# po!er of the peso has been so eroded such that one has to pay ,*++.2. for a commodity or ser"ice !hich cost 0ne ;undred ,esos -,*...../ only in 1..9. * The nation!ide consumer price inde) -1..9<*../ as of =une 1.*+ for food, health and education are the hi#hest: >ood and 3on?Alcoholic (e"era#es is at ,*@1.6.8 ;ealth, ,*+*.9.8 and Aducation, ,*@@.9.. 0n the other hand, CARAGA !ith ,*@2... e)perienced the #reatest erosion of the purchasin# po!er of the peso. The la! should al!ays be responsi"e to the needs of the people. An increase in the ceilin# of this particular ta) e)emption is one of the reliefs the people need durin# these hard times. 4ue to the fore#oin#, the passa#e of this measure is sincerely sou#ht. RALPH G. RECTO SIXTEENTH CONGRESS OF THE ) * http:BB!!!.census.#o".phBsitesBdefaultBfilesBattachmentsBitsdBcpiBcpi1..9C*+.9*5.pdf 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 2 REPUBLIC OF THE PHILIPPINES ) First Regular Session ) SENATE S. No. ________ Introduced by Senator Ralph G. Recto AN ACT INCREASING THE CEILING OF THE !TH "ONTH PA#$ CHRIST"AS BONUS AN% OTHER BENEFITS EXCLU%E% FRO" THE CO"PUTATION OF GROSS INCO"E FOR THE PURPOSES OF INCO"E TAXATION$ A"EN%ING FOR THE PURPOSE SECTION !& 'B)$ CHAPTER (I OF THE NATIONAL INTERNAL RE(ENUE CO%E OF ))*$ AS A"EN%E% Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: Se+t,on . Section +1 -(/, Chapter DI of the 3ational Internal Re"enue Code of the ,hilippines -R.A. 3o. 5@1@/ is hereby amended as follo!s: SECTION. !&. Gro-- In+o.e. / 0'A) General Definition. xxx ))) 'B) Exclusions from Gross Income. E The follo!in# items shall not be included in #ross income and shall be e)empt from ta)ation under this title: 0xxx 0'*) ",-+ellaneo1- Ite.-. / ))) -e/ *+ th 7onth ,ay and 0ther benefits. E Gross benefits recei"ed by officials and employees of public and pri"ate entities: Provided, hoever, That the total e)clusion under this subpara#raph shall not e)ceed FThirty thousand pesos -, +.,.../G SIXT# THOUSAN% PESOS 'P 23$333) !hich shall co"er: -i/ (enefits recei"ed by officials and employees of the national and local #o"ernment pursuant to Republic Act 3o. 99598 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 1 -ii/ (enefits recei"ed by employees pursuant to ,residential 4ecree 3o. 56*, as amended by 7emorandum 0rder 3o. 15, dated Au#ust *+, *9598 -iii/ (enefits recei"ed by officials and employees not co"ered by ,residential decree 3o. 56*, as amended by 7emorandum 0rder 3o. 15, dated Au#ust *+, *9598 and -i"/ 0ther benefits such as producti"ity incenti"es and Christmas bonus: Provided, further, That the ceilin# of FThirty thousand pesos -, +.,.../G SIXT# THOUSAN% PESOS 'P23$333) may be increased throu#h rules and re#ulations issued by the Secretary of >inance, upon recommendation of the Commissioner, after considerin# amon# others, the effect on the same of the inflation rate at the end of the ta)able year. ))).% Se+. &. Repealing Clause. E All la!s, decrees, resolutions, orders or ordinances or parts thereof inconsistent !ith this Act, are hereby repealed, amended or modified accordin#ly. Se+. !. !ffectivity. E This Act shall ta'e effect fifteen -*6/ days after its publication in the 0fficial Ga:ette or in at least t!o -1/ ne!spapers of #eneral circulation. Appro"ed, 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1