DOF tax package to remove VAT exemptions on elderly, PWDs

(UPDATE) Senior citizens and persons with disabilities (PWDs) may feel the impact of the Department of Finance’s tax reform package which proposes to scrap their perks of exemptions from the value added tax (VAT).

In the proposed bill filed at the House of Representatives’ ways and means committee, it seeks to repeal the laws which have been allowing senior citizens and PWDs VAT exemption—Section 4 of the Expanded Senior Citizens Act and Section 32(a) of the Magna Carta for Persons with Disability.

The bill seeks to repeal the tax perks of the elderly and PWDs as an offsetting measure as it seeks to lower the personal income tax rate. The bill also seeks to impose additional excise tax on petroleum products.

READ: Solons warn DOF tax reform package to pass on burden to consumers

In an interview, ways and means committee chair Quirino Rep. Dakilo Cua admitted the removal of the VAT exemptions on the elderly and PWD is a sensitive issue.

“It’s a very emotional thing talaga,” Cua said.

He said the committee would study the proposal whether or not it would affect the more affluent senior citizens, or the senior citizens who receive tax exemption for their years in public service.

“I’m not saying it’s wrong. I’m just saying that’s the point of discussion,” Cua said.

In repealing Section 4 of the Expanded Senior Citizens Act or Republic Act 9994, the DOF’s proposed package would remove the twenty percent discount and VAT exemption being enjoyed by senior citizens on the following services and products:

medicine;

professional fees of attending physicians and licensed professional health,

medical and dental services;

diagnostic and laboratory fees;

actual fare on land, public utility, mass transit, domestic air and sea travel;

hotels and similar lodging establishments, restaurants and recreation centers;

theaters, cinema houses and concert halls, circuses, leisure and amusement;

funeral and burial services for the death of senior citizens.

The bill would also repeal the provision exempting the elderly from paying individual income taxes considered to be minimum wage earners.

The bill would also repeal the grant of a five percent discount to the monthly utilization of water and electricity for monthly consumption not exceeding one hundred kilowatt hours (100 kWh) of electricity and thirty cubic meters (30 m3) of water.

Meanwhile, the bill would repeal Section 32(a) of the Magna Carta for Persons with Disability or Republic Act 10754, the latest amendment of which was just passed under the 16th Congress and signed into law by erstwhile president Benigno Aquino III.

The deletion of the provision effectively removes the following VAT exemption and 20 percent discount of PWDs on the following services and products:

fees and charges relative to the utilization of all services in hotels and similar lodging establishments;

restaurants and recreation centers;

admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement;

purchase of medicines in all drugstores;

medical and dental services including diagnostic and laboratory fees, and professional fees of attending doctor;

actual fare on land, public utility, mass transit, domestic air and sea travel;

funeral and burial services for the death of the PWD.

Cua said he planned to file the bill containing the DOF’s proposed tax package within 10 days.

Cua said his committee would study the package meticulously, joking that he even feared reprisal from his own mother.

“Pati nanay ko magagalit saken diyan. We’ll really study it,” Cua said.

In a press briefing, two elderly lawmakers slammed the removal of VAT exemption as a cruel measure against the elderly ageing population, especially as it was filed just after President Duterte signed the implementing rules of the Centenarian Act.

Under the law that Lagman authored in the 15th Congress, every Filipino citizen who celebrates his or her 100th birthday will receive a cash gift of P100,000 from the national government on top of a cash incentive.

Northern Samar Rep. Raul Daza said the move was “cruel” because the President in his budget message said he would take a “human approach” in his administration’s proposed budget.

“This is what he said. In the concluding part of his message, ‘As I said in my first SONA, governance and development will be for naught if we do not take a human approach,'” Daza said.

Daza said the move runs contrary to the Filipino culture of giving respect to the elderly.

“If we talk of human approach, we talk of that kind of approach that is conformable to our culture… Sa culture natin, ang senior citizens, pinagpipitagan natin. Eh bakit kung ano ang exception na binigay sa senior citizens ay tatanggalin natin? Hindi naman human iyon,” he added.

(In our culture, senior citizens must be respected. So why do we remove the exception that was given to them? That is being inhuman.) TVJ

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