The Senate has approved on third and final reading a bill seeking to lift the limit on the number of qualified dependents that a taxpayer may claim on tax deduction.
Authored and sponsored by Sen Ralph Recto, the Senate Bill 2855, or the Family Care Act of 2013, seeks to amend Section 35, paragraph B of the National Internal Revenue Code of 1997, which limits the number of dependents to only four at P25,000 per person.
While the cap on the number of dependents was established in 1973 to promote family planning, Recto said the tax code discriminates against large families.
He cited a study by the Commission on Population which showed that "only women in the lowest and second lowest wealth quartile have four or more children", adding these groups are not even income tax payers.
"The committee's rational for removing the limitation on the number of qualified dependents for the tax purpose is that we believe, and we find support from economists, that setting a limitation on the number of dependents has no bearing on the decision of couples to beget children," Recto said.
The bill proposes to include as dependents legitimated children who are "born outside of wedlock of parents and, under certain conditions, may be legitimated."
At the same time, the measure proposes to expand the coverage of qualified dependents to include parents or both parents who are dependent on the taxpayer for support and are living with him or her.
The coverage, Recto explained, also includes a parent or parents, regardless of income, who are incapable of self-support because of mental or physical disability.
"We also propose to allow a taxpayer who acts as legal guardian of a person with mental or physical handicap, regardless of age and incapable of self-support, to claim the additional exemption for the said dependents," Recto said.