*Additional pay of govt men tax-free Recto*

The additional allowance government workers is set to receive is exempt from income tax, Sen. Ralph Recto, chair of the Senate ways and means committee, said.

Its tax-free. It will not be included in the computation of income tax, Recto said.

He added that the increase is deemed an allowance and strictly speaking, shall not form part of the salary, which is the basis in computing income tax.

Thus, the employee will get the additional compensation in full, Recto explained.

Because it is classified as an allowance, it will not also be subjected to GSIS and PhilHealth premium deductions, he said.

At present, pension fund and health insurance payments are based on the basic pay of an employee so if the basic pay will be increased GSIS and PhilHealth payments will likewise be adjusted, Recto said.

Recto said Budget Secretary Romulo Neri has confirmed this when he told senators during the hearings on the 2006 national that indeed the proposed pay hike is not taxable.

Recto has filed a counterpart bill in the Senate which seeks to appropriate P13.1 billion for additional allowance of 1.1 million state workers.

He revealed the possibility that the P13.1 billion could be the first installment of the pay hike for government workers with the balance to be included in the national budget for 2006.

To expedite the passage of bill, the Senate can even ratify without amendments the House bill that will be transmitted, on the condition that the Senate can augment the allowance through a provision in the 2006 budget, he said.

He said an eight percent hike would require P13.1 billion a year, but a P1,000 across-the-board increase for all national government workers, which some government unions prefer, would require P15.9 billion.