Congress to raise tax-exemption cap on 13th month pay, bonuses

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Tuesday, February 18, 2014

MANILA -- Senate President Franklin Drilon on Tuesday said that both chambers of Congress have agreed to increase the tax exemption limit on the 13th month pay, Christmas bonus, and other work benefits from the current P30,000 to P75,000.

In a statement, Drilon said the legislation proposed by Senate Pro-Tempore Ralph Recto will receive "urgent legislative attention due to its direct effect to millions of Filipino workers around the country."

"(This is) to provide relief to state and private workers whose purchasing power has been shrinking for years due to inflation, but still have had to deal with the consequences of an outdated law," said Drilon, noting that the current tax limit is imposed by a 20-year-old law.

Legislated back in 1994, Republic Act 7833 imposes a P30,000-cap on bonuses when the lowest monthly basic salary for government employees (Salary Grade 1, Step 1) was pegged at P2,800, while the President of the Philippines (Salary Grade 33) received P25,000 per month.

"The law was passed 20 years ago, and obviously, things have greatly changed - making such figures no longer reflective of current economic realities, thus making it even more difficult for the average Filipino worker to make both ends meet for him and his family," Drilon said.

Today, the basic salary for government employees is pegged at P9,000, with the highest salary reaching P120,000 per month.

"While most of the priority bills right now focus on macroeconomic progress, we have to make sure that necessary bills will also receive the required resources and attention towards their passage, for the sake of our countrymen," he said. (Sunnex)

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