THE Department of Finance claimed that most of those benefitting from the value-added-tax exemption granted to senior citizens are the rich and middle class that is why it is proposing to limit the old age tax exemption to medicines.
At the hearing of the senate ways and means committee chaired by Sen. Juan Edgardo Angara, DOF undersecretary Karl Kendrick Chua, said the agency is looking at forgoing VAT exemption of senior citizens for non-essentials because they are mostly benefited by the rich senior citizens since the poor and low income typically buys from VAT exempt stores.
Under the proposed tax reform package of the DOF, presented during the hearing the government wants to remove VAT exemptions of senior citizens and people with disabilities (PWDs) on other purchases aside from medicines.
Chua told that committee that by lifting the VAT exemption, the government could generate P3 to P6 billion.
He added that at present VAT leakage is between P6 billion and P10 billion.
“For senior citizens, we are proposing to retain the exemptions on medicine in our new proposal. However, we find that the expenses in restaurants, travel air fare, for instance, mostly are consumed by the rich who can afford to pay and go to these restaurants so we’re proposing to remove the exemptions,” the DOF official told the committee.
The money that would be generated from removing old age and PWD VAT exemptions could be used to directly to benefit the poor and vulnerable senior citizens.
Angara however told the DOF that the issue should not be viewed only as a “mathematical” issue because thousands of senior citizens are expected to be affected by the proposal.
“It’s an emotionally charged issue not a purely mathematical issue. Seniors feel it is something they have earned having served for so long. You might not want to spend your political capital there,” Angara told the DOF official.
Chua however pointed out that they are fighting more on the principle of equity.
“There is also the principle of compassion. One of reason president came into power because people saw other candidates not as compassionate. He wanted to have more working people have more money in their pockets,” Angara responded.
In an interview after the hearing Angara said that there is a need to thoroughly the matter and hear the position of senior citizens group.
He also however assured the senior citizens that he would listen to all sectors before coming up with a position.
“We will not support something that the sector (senior citizens) do not want to support,” he added.
As for the proposed lifting of VAT exemption to PWDs, Anagra said he would rather wait for the law granting Vat exemption to PWD implemented first before looking at the DOF proposal.
The proposed law granting Vat exemption to PWD was signed by former President Benigno Aquino 3rd last March, but it has yet to be implemented because of the absence of the Implementing rules and regulations (IRR)
Under RA 10754 (Magna Carta for Disabled Persons) the Department of Social Welfare and Development (DSWD), in consultation with the Department of Health (DOH), the Department of Finance (DOF), and the National Council on Disability Affairs (NCDA), o9ishall promulgate the IRR. Jefferson Antiporda