Press Release
May 22, 2011

More take-home pay for individual taxpayers
Tax Code revision lifts cap on qualified dependents; includes parents & special children as additional tax exemptions

Aside from a looming increase in wages, ordinary taxpayers could also look forward to additional savings or increased take-home pay resulting from their tax payments by allowing them to declare as tax deductible more than the four qualified dependents currently allowed by law.

Sen. Ralph G. Recto, Senate ways and means chair, said a consolidated bill awaiting plenary presentation will amend the National Internal Revenue Code (NIRC) or Tax Code and scrap the maximum limit of four qualified tax dependents.

Currently, the NIRC sets a cap of up to a maximum of four qualified dependents that a taxpayer could claim as additional allowable tax exemptions.

Recto said once approved, any individual taxpayer could declare more than four qualified dependent children as long as they're below 21 years old and, in exchange, obtain a tax deduction of P25,000 for every dependent.

The senator said an individual taxpayer who filed for five qualified dependents would be entitled to a P125,000 deduction in his income tax payment.

Recto also said an individual taxpayer living with or looking after his biological parents could declare them as additional qualified dependents as long as the parents are not gainfully employed or are incapable of self support because of mental or physical defect.

"You don't want them thrown in foster care, which is very un-Filipino. We should take care of our parents during their twilight years," he said.

Recto said the consolidated bill authored by him and two other colleagues likewise grants an additional tax deduction of P25,000 to a taxpayer acting as legal guardian to a physically or mentally-challenged person regardless of age.

He stressed that this would ensure that the disabled and special children would be taken care of during their difficult years.

The senator lamented that capping the number of qualified tax dependents to only four persons is "effectively a family planning method in disguise."

"You don't implement your family planning program through a tax fiat," Recto said.

He said the proposed measure also makes easier for taxpaying individuals who are already burdened by tough economic times to continue taking care of their parents and people with physical and mental defect.

The senator nevertheless stressed that even with or without the promise of additional tax deductions, "children should always take care of their parents and should have a caring heart for the disabled and special children."

Recto was joined by Senators Manuel Villar and Antonino Trillanes IV as co-authors of the consolidated measure.

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