Vilma Santos files bill seeking tax-exemptions for overtime pay

Posted on August 20, 2016

A neophyte lawmaker and award-winning actress has filed a bill at the House of Representatives seeking a tax exemption for overtime pay.

First-term Batangas Rep. Vilma Santos-Recto (6th district) filed House Bill 2599 aiming to amend the Section 32(B)(7) of the National Internal Revenue Code (1987) crafted in 1997 which provides that overtime pay -- or compensation due to hours worked in excess of the required maximum -- will not be included in the gross income and will be tax-exempt.

While the proposed law, if approved, will cost the government foregone revenues, more money in taxpayers’ pockets will boost consumer spending that can benefit the economy, Ms. Santos-Recto said.

This “would trigger demand for more goods and services and thereby stimulate activities in the industrial and service sectors and generate more taxes,” Ms. Santos-Recto, chairman of the House committee on civil service and professional regulation, explained in her explanatory note.

“An employee who renders overtime work puts in additional hours of work and requires greater physical and mental effort. Instead of being able to rest early and spend more time with the family, the employee is forced to extend the working hours to achieve management’s goals. Thus, it is only fitting that the employee be properly compensated for additional work hours rendered,” she added.

Under the NIRC, the only exclusions from gross income are life insurance; amount received by insured as return of premium; gifts, bequests, and devise [or property donations]; compensation for injuries or sickness; income exempt under treaty; retirement benefits, pensions, gratuities; and other miscellaneous items such as prizes from sports competition and 13th month pay and other benefits not exceeding P82,000, among others.

The bill has already been referred to the House committee on ways and means chaired by Quirino Rep. Dakila Carlo E. Cua. -- Ray F. Javil