There’s a saying that goes: “There are only two things constant in this world — death and taxes..”, something to that effect.

Income taxation is not always a level playing field. The rich can easily avoid or minimize their income taxes, while the hapless, fixed-income employees cannot avoid at all — except when the employee is in management-level and the company provides tax break on certain percentage of the salary.

The latest news is that Congress (Lower House) has passed the proposed bill increasing the tax exemption rate.

“THE House ways and means committee yesterday approved a bill exempting all minimum-wage earners from paying income tax by raising the ceiling of personal exemptions to P150,000 from P94,000 a year.

The higher exemption means a breadwinner earning P12,500 or less a month would not pay any income tax.

At least 94,202 state workers occupying salary grade 5 and below would benefit from the enactment of the bill. These workers receive a basic salary of between P7,457 and P9,209 a month.”

However, the Senate version differs the Lower House provisions. Thus,

“Under the Senate version, he said, tax-exempt personal income was raised to the same fixed P50,000 for all workers. Currently, the exemption is P20,000 for single workers, P25,000 for a family head, and P32,000 for married individuals.

“If you are an individual and you are a minimum wage earner, you are exempted [from paying tax]. If you are an individual but not a minimum wage earner and you have no child, your exemption is P50,000,” he said. ”

In the Congress, the provisions are:

“xxx members of the House of Representatives on Monday voted to approve House Bill No. 3971, which seeks to grant a single individual, a legally separated individual with no qualified dependents, a head of family and each married individual a personal exemption of P50,000.

The amount is more than double the P20,000-exemption allowed for single and married individuals under current tax filings, double the P25,000-exemption for head of family, and much higher than the P32,000-exemption for each married individual.

The bill also seeks to raise the exemption of each of four dependents to P25,000, from the current P8,000.

In effect, it seeks to grant a head of family and his spouse (if both are working), with four dependents, a total exemption of P200,000, the lawmakers said. At present, only a family of six earning P96,000 and below enjoys higher tax exemptions.”


“At the same time, the bill seeks a simplified net income taxation (SNIT) scheme for the self-employed and professionals.

The proposed legislation, a consolidation of 20 bills, will increase tax exemptions for a family of six with a total annual income of P200,000 and below.

Antique Representative Exequiel Javier, chairman of the House committee on ways that deliberated and approved the proposed legislation, said the inclusion of the SNIT scheme was meant to offset the P11.5 billion expected losses from the higher tax exemptions.

Under the proposed SNIT, a 40 percent discount will be given to self-employed and professionals to encourage them to declare their income”


“Finance officials at the hearing said raising the personal exemption to P150,000 would cut government tax revenues by P7.95 billion.

But they said that would be offset by the bigger tax take expected from the self-employed and professionals.”