THE yuletide season will be merry for over a thousand employees of the Cebu provincial government after the treasurer’s office released their year-end bonus yesterday after the Capitol’s Christmas party.
But some employees lament the withholding tax deduction that took a big chunk from their take-home pay.
Employees received a bonus of P22,000 or the equivalent of one month pay, depending on their salary.
Employees who earned less than than P22,000 a month received the fixed amount.
This year’s incentive is higher than last year’s across-the-board incentive of P20,000.
“We did our best to give this early so that the employees can buy necessities and gifts for Christmas and New Year,” said Provincial Budget Officer Danilo Rodas.
“This is also what the governor wanted, to release this early.”
The bonus was taken from the P38.5 million supplemental budget passed by the Provincial Board.
A total of 1,547 regular, co-terminus and casual employees qualified for the incentive. Job order and outsourced personnel are not covered.
Aside from their bonus, employuees who won in the raffle brought home rice, ham and canned goods.
In his speech at a short program at the Capitol social hall, Gov. Hilario Davide III urged employees to spend time with their families since the holiday is a good opportunity for bonding.
“Let us give more, love more, be patient and and understanding with one another,” he said.
Some employees complained about the tax deducted from the bonus.
An employee who spoke on condition that he not be named said he only received P15,000 after P7,000 was deducted from his incentive. Another employee said his bonus was halved because of the tax.
“We thought makuhaan lang ug P2,000 or less. We did not expect it would be this big,” said the employee.
The Bureau of Internal Revenue (BIR) in June issued a memorandum imposing new taxes on government employees’ financial benefits and allowances.
Revenue Memorandum Order (RMO) 23-2014 imposed a 30 to 32 percent on these allowances and other benefits, which include honoraria, food subsidy, hospitalization and medical benefits, clothing, cost-of-living and transportation allowances, and monetized value of leave credits which were never taxed before.
Former senator Aquilino Pimentel Jr. led government employees in filing a petition before the Supreme Court assailing the BIR’s new memorandum. They said the circular was unconstitutional as it usurps the power and authority of the legislature.
Pimentel further argued that the BIR also violated Section 2 of the National Internal Revenue Code when it implemented the RMO without the necessary approval of the secretary of finance.
Labor leader and former senator Ernesto Herrera, in his column in the Manila Times, criticized the BIR for issuing the memorandum, saying the BIR’s oppressive deductions on their benefits in the absence of salary increase tempts government employees to commit graft and corruption just to make ends meet.
“Most government workers’ salaries are eaten up by their household bills, their pay hardly enough to cover the skyrocketing prices of basic commodities, oil, gasoline, electricity and water bills.
Government workers really need these fringe benefits to survive. Why charge them such a substantial amount in taxes?” he said.
“By imposing additional burdens on the already overburdened state workers you are taking away their incentive to deliver efficient service to the general public. How can you work properly or focus your attention on the needs of the citizen in front of you if you are worried about where to get your child’s tuition or how to pay your overdue electricity bill?”
The Senate late last month approved Senate Bill 2437 on third and final reading a bill hiking the tax exemption ceiling of private and public employees’ bonuses from P30,000 to P82,000.
Sen. Juan Angara said employees receiving 13th-month pay, Christmas bonuses and other benefits not exceeding P82,000 will be exempted from tax. The House of Representatives passed its own version of the bill in September. He noted that the proposed P75,000 tax exemption ceiling was raised to P82,000 upon Sen. Ralph Recto’s suggestion during plenary deliberations.
Angara said Recto’s amendment was accepted because his proposed tax exemption ceiling was the same figure given by Bureau of Internal Revenue Commissioner Kim Henares during one of the hearings on the measure.
“She (Henares) said that P30,000 in 1994 would be worth around P82,000 today,” said Angara, chairman of the Senate Committee on Ways and Means.
Senate President Franklin Drilon concurred with the adjustment of the tax exemption ceiling, saying that the bill’s passage is necessary “to provide relief to state and private workers whose purchasing power has been shrinking for years due to inflation, but still have had to deal with the consequences of an outdated law.”
Angara explained that the P30,000 tax ceiling had not been adjusted in 20 years. Recto, meanwhile, said the peso had lost two-thirds of its value over the same period.
Angara had included a provision that will require the tax ceiling to be adjusted every three years to coincide with major surveys conducted by the Philippine Statistics Authority such as the Family and Income Expenditure Survey.
Drilon said the measure may not be implemented this year due to time constraints.
The bill is expected to benefit about half a million employees.