MALACAÑANG is reportedly considering taking away the value-added tax (VAT) exemptions granted to some sectors, including senior citizens and persons with disability (PWD) as part of its tax reform program.
The plan was among matters discussed in a meeting between senators and Finance Secretary Carlos Dominguez 3rd on Monday night in Malacañang.
President Rodrigo Duterte joined the meeting.
Senate Minority Leader Ralph Recto said while the administration does not have plans to increase VAT rates, it is, however, looking at the possibility of lifting exemptions granted to some sectors.
“I think [the lifting of]some [exemptions]will be very difficult to do. I wrote the VAT law, it took a lot of time for me to write all of that and all those exemptions for the poor,” Recto said in an interview.
Among the exemptions that might be removed include those granted to the agriculture, livestock and export sectors.
“Senior citizens and persons with disabilities, I don’t think you can lift their exemptions,” Recto said.
He said the removal of VAT exemptions is being eyed to cover for the planned lowering of corporate and personal income taxes that was among the campaign promises of Duterte.
According to estimates, the government stands to lose P75 billion from the lowering of individual and corporate taxes and the government wants revenues to cover the loss and at the same time earn some P600 billion.
“That’s just too high. I don’t think you can do that,” Recto said, adding that the administration has 10 tax reform proposals lumped into five packages.
Senator Joel Villanueva, who was invited to the meeting, said he was in favor of lowering individual income tax rates, but not the plan to scrap VAT exemptions.
“The intention is good but of course I have some doubts. It is ambitious,” according to Villanueva.
Senator Richard Gordon said some of the tax programs presented by the Department of Finance needed to be studied thoroughly.
“The role of VAT is to rationalize the reduction of the income tax to recover the losses,” he said.
Also present in the meeting were Senators Joseph Victor Ejercito, Juan Miguel Zubiri, Cynthia Villar and Alan Peter Cayetano.