Diluted Christmas cheer

Congress played a cruel trick on wage earners when it put off for 2015 the implementation of a bill it earlier approved that will raise the tax exemption cap on the 13th-month pay and bonuses.

When the bill was being discussed in the two legislative chambers, their leaders said they would expedite its approval so its benefits could be enjoyed this year.

The congressmen voted to increase the amount of the year-end extra pay that should be tax exempt from P30,000 at present to P70,000. Feeling magnanimous, the senators raised the cap to P82,000.

Upon learning of the Senate’s action, the congressmen (probably not wanting to look like Scrooges) quickly amended their own bill and adopted the Senate version.

But the expected immediate enjoyment went naught after Congress decided to defer the implementation of the proposed law to next year.

Understandably, the change of heart drew adverse reaction from the affected parties who were looking forward to a bigger 13th-month pay this holiday season.

Stung by criticisms about the deferment, the lawmakers fumbled for reasons to justify their action.

Excuses

A lawmaker said an immediate implementation would cause some problems to companies that have already given the 13th-month pay to their employees.

Big deal! In this age of digital technology, computing the amount of money that should be added to the affected employees’ pay envelope or ATM account, and the taxes due on the adjusted 13th-month pay is a walk in the park.

Given the right instructions, an accounting clerk can simply key in the figures in the company’s payroll and tax templates to get the desired results.

Then the excuse given was the delay is necessary to give the Bureau of Internal Revenue (BIR) sufficient time to prepare the implementing rules and regulations for the new law.

Hello! This is not the first time the BIR is collecting the tax on the 13th-month pay. The rules governing the computation and collection of the applicable tax have been in place for decades.

For the new tax exemption cap, all the BIR has to do is substitute the old figures with the new rate and, unless the BIR has come up with a new formula on income tax computation while the public was not looking, the rest of the regulations will be the same.

What’s more, the reporting requirements already in place for compensation income need not be modified or adjusted for this purpose because it is merely a question of increasing the tax exemption cap.

Intentions

Finally, Sen. Ralph Recto let the cat out of the bag. He said the real reason behind the delay was that the Department of Finance (DOF) had requested it.

If Revenue Commissioner Kim Jacinto-Henares is to be believed, the government would lose P30 billion in revenue from the said tax exemption adjustment.

Besides, according to her, only 1.5 million people who belong to the middle class will benefit from it.

In the face of the DOF’s opposition to the immediate implementation of the proposed law, Recto expressed apprehension that if Congress did not agree to the request, President Aquino might veto the bill.

For this clearly pro-people bill, Recto is scared he cannot muster the two-thirds vote of Congress that can override the feared presidential veto.

It is unfortunate that the final deliberations on this bill have been hijacked by the DOF. The alleged potential P30-billion revenue loss has become the determining factor on when it would be implemented.

From the BIR’s point of view, the interests of the 1.5 million people who stand to benefit from it are not worth taking into consideration in the equation. The middle class, who contribute a substantial portion of the country’s income tax collections, can go bust.

Lost in the discussion is the principal purpose for which this year-end benefit was provided for in the first place.

The 13th-month pay became mandatory by virtue of Presidential Decree No. 851 which was issued on Dec. 16, 1975, at the instance of then Labor Secretary Blas Ople.

Its “whereas” clause states that “the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year.”

Enjoyment

At its inception, the 13th-month pay was intended to put extra cash on the hands of the wage earners to enable them to enjoy the season that majority of Filipino families look forward to for happy bonding moments.

It’s an end-of-the-year celebration that combines the features of Thanksgiving Day, Chinese Lunar New Year, Vietnamese Tet and other traditional annual religious activities.

The 13th-month pay was envisioned to be a one-time source of additional revenue for the working man, not for the government.

True, it is income, but it is a kind of income imbued with a special character and purpose that differentiates it from the ordinary income that is subjected to tax.

The 13th-month pay may be likened to pensions, retirement or separation pay and other forms of gratuities that are exempt from taxes because of their extraordinary nature.

With the tax imposition, the government has diluted the Christmas and New Year cheer that this benefit originally meant to give to its beneficiaries.

Scrooge and the Grinch will find good company in government officials who look at the 13th-money pay as a revenue measure rather than an instrument for happiness during the holiday season.

Despite all these, however, there is enough reason to be thankful for all the blessings we have received this year.

Merry Christmas!

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