Recto wants gov’t workers’ performance-based bonus tax-free

Robie de Guzman
Senate President Pro-Tempore Ralph Recto

MANILA, Philippines – Senate President pro-tempore Ralph Recto said he has filed a bill seeking to exempt from income tax the performance-based bonus (PBB) being given to government personnel.

Under Senate Bill No. 602, Recto proposes to exclude the PBB from the computation of taxable income under the law, arguing that its monetary value which was formulated as an effective reward for exemplary work has been reduced.

“Government is a machine whose parts should move in unison towards the attainment of its strategic goals as reflected in its development plans. This machinery is judged by the people through its outputs in terms of delivery of goods and services,” he said in a statement.

“However, the best-crafted strategic development plans will be for naught if civil servants who will implement these are not inspired and committed to achieve the plans,” he added.

The senator said the measure seeks to amend Section 32 (B) (7) of the National Internal Revenue Code of 1997 by including the PBB in the miscellaneous items excluded from the computation of gross income tax.

He added that in order to serve as a meaningful reward for employees who walked the extra mile towards the attainment of agency goals, the bonus must be granted in full amount.

“The bill could likewise serve as a motivational tool for agencies and employees rated ‘poor’ to improve their performance,” he said.

Aside from the performance-based bonus, the government also grants a P5,000 across-the-board Productivity Enhancement Incentive (PEI) to all government employees.

Both the PEI and the PBB are granted to employees as an incentive to improve productivity in the public sector.

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