The House Ways and Means committee has agreed to raise the P30,000 ceiling for tax-free 13th month pay, a House leader said on Thursday.
Rep. Romero Quimbo of Marikina said the panel has formed a Technical Working Group to determine the new ceiling.
“There is a unanimous consensus that definitely, we will increase it. The feasibility of this measure is very strong, considering that the ceiling on the tax-free 13th month pay has not been touched for the last 20 years,” Quimbo told The Manila Times.
He said the P30,000 ceiling was implemented in 1994.
“With hikes in inflation and consumer price index, the ceiling should at least be doubled today from that 1994 amount. In the same way that the state provides for system of direct subsidy under CCT for the poorest of the poor, we should give assistance to the hardworking regular employees by increasing the ceiling,” Quimbo pointed out.
He was referring to the government’s Conditional Cash Transfer program which grants cash assistance to poor families provided that they comply with conditions that promote education and health.
The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) are opposed to the measure increasing the tax-free ceiling, but the lawmaker said fears of lower revenues is not a valid reason to make the 1994 ceiling stagnant.
Based on documents that the DOF presented to Congress last year, increasing the ceiling to P40,000 would mean a loss of P1 billion in revenues.
But Quimbo dismissed the projection.
“There is just no sufficient ground not to raise it anymore.
After all, the 13th month pay was institutionalized because we want to provide elbow room to our workers, give them money to spend for Christmas and enrollment [of students],” he said.