Press Release
September 3, 2014

Drilon: Congress eyes passage of twin bills
to increase workers' take-home pay

The Congress is eyeing the passage of two major bills aimed at alleviating tax impositions on Filipino workers and increasing their take-home pay within the 16th Congress, according to Senate President Franklin M. Drilon.

"The Congress is aware of the necessity to revisit our existing tax structure which has remained unchanged since 1997. The Congress is committed to pass legislation which will lower individual income taxes in order to help our workers in dealing with the effect of inflation," said Drilon.

"If the salary hike that our workers have been asking the government to provide is not yet possible due to fiscal constraints, a legislation that will increase the workers' net take-home pay is the best alternative we can work on," he added.

The first bill which will receive urgent legislative attention, according to Drilon, is the one that will lower the rates of individual income tax and adjust individual income tax brackets. The proposed measure is being heard in the Committee on Ways and Means of both houses of Congress.

The Senate leader also warned that in 2018, if Congress fails to plug loopholes in the nation's existing tax system, the lowest ranking government employees will find themselves paying under the same tax bracket as the next Philippine President himself.

The same will be the case for entry level employees of an average corporation who will share the 32% tax rate with the executives and top officers of their company, who obviously earn way much more.

Both scenarios will be inconsistent with the requirement of the Constitution for a progressive system of taxation, said Drilon.

Drilon further stressed: "If we do not seriously study our tax system and make the necessary adjustment, by 2018 everyone will pay the same tax rate which is not progressive as what the Constitution mandated. This is the sort of unjust ways of taxation that we will need to prevent."

Under Article VI, Section 28 of the 1987 Constitution, it states that (1) "the rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation."

"We at Congress are ready to work on any proposed measure that can help the average Filipino in their daily expenses. The lowering of tax rates may affect the nation's overall revenue collection, but it will increase the purchasing power of our countrymen and it will be of great convenience for them," said Drilon.

"When we increase their purchasing power, we could also expect an increase in the household spending that will contribute in the country's overall economic growth," he added.

The Congress will also pass a bill which will raise the tax exemption limit on the 13th month pay and other work benefits of all workers in the public and private sector.

"We have an agreement with the House of Representatives that we will pass this bill within the year, so that Christmas could be merrier for our workers," said Drilon.

The proposed measure intends to raise the exclusion limit on an individual's 13th month pay, Christmas bonus, and other work benefits from income taxation from the current imposed limit of P30,000 to P75,000.

"There is really a need to revisit the antiquated provisions of the Republic Act No. 7833 which imposed the P30,000 cap on bonuses back in 1994," said Drilon.

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