House panel OKs bill giving workers tax relief

MANILA, Philippines - The House committee on ways and means yesterday endorsed a bill that would give salaried workers tax relief by removing the limit on the number of children entitled to tax exemption.

The measure would allow spouses to claim additional tax exemption for as many legitimate children as they have. The law now limits to four the number of dependents entitled to exemption.

Currently, working spouses can claim personal tax deductions of P50,000 each, plus P25,000 for each of a maximum of four dependent children, for a total of P200,000.

However, only one of the spouses can claim exemptions for dependents.

This means that working couples with four dependents have a monthly tax-free income of more than P16,000.   

Under the approved bill, couples with six children can claim a total of P250,000 in tax exemptions.

Authors of the measure said the proposed law would be a big relief for salaried spouses with a combined income of at least P16,000 a month as they would no longer pay income tax.

They said employees would have more disposable income, which they can save or spend on necessities.

The ways and means committee approved a second bill doubling the tax exemption for a disabled dependent to P50,000.

Legal guardians of disabled children can claim the exemption provided their biological parents do not claim it.

The bill defines a disabled person as “a person suffering from restriction or different abilities as a result of mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being.”

It refers to a dependent as “a legitimate, legitimated, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than 21 years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical disability.”

A dependent shall also refer to “a parent or both parents living with the taxpayer, not gainfully employed and dependent upon the latter for chief support, or where such parents are incapable of self-support because of mental or physical disability or old age.”

The Department of Finance and the Bureau of Internal Revenue are expected to oppose the approval of the tax relief bills as these would result in a revenue loss for the government.

Finance Secretary Cesar Purisima has appealed to House members to refrain from approving measures that would erode government revenues.

He said several revenue-eroding bills that have recently become law would mean revenue losses of more than P100 billion a year.