Press Release
November 18, 2019

Exempt government workers' performance bonus from tax - Recto

Performance-based bonus (PBB) of government employees should be granted in its full amount and tax-free, Senate President Pro-Tempore Ralph G. Recto said.

Recto, in filing Senate Bill No. 602, proposed to exclude from the computation of taxable income the PBB granted to qualified government personnel.

Formulated as an effective reward for exemplary work, the senator said its monetary value has been reduced as it is subject to income tax.

"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. 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," Recto said.

Recto's measure seeks to amend Section 32 (B) (7) of the National Internal Revenue Code of 1997 by including the PPB in the miscellaneous items excluded from the computation of gross income tax.

To serve as a meaningful reward for employees who walked the extra mile towards the attainment of agency goals, the senator said the PBB must be granted in its full amount and should not be subjected to income tax.

"The bill could likewise serve as a motivational tool for agencies and employees rated 'poor' to improve their performance," Recto added.

Aside from the PBB, 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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