Senate ratifies bills,giving tax breaks to PWDs, local water districts

The Senate ratified on Tuesday evening the bicameral conference committee report on proposals to grant tax breaks to persons with disabilities (PWDs) and local water districts.

Senator Juan Edgardo Angara, chairman of the committee on ways and means, presented the report to the plenary.

Earlier in the day, the joint panel of the Senate and House of Representatives approved the proposals "in a quick but productive meeting this morning,” according to Senator Ralph Recto.,

The first bill exempts PWDs from paying the Value Added Tax (VAT) on top of the 20 percent discount they are entitled to on certain goods and services, while the second aims to remove the conditions for the condonation of unpaid income taxes due from local water districts.

Recto, who authored both bills, said the first bill also allows a "relative of a PWD," up to the 4th civil degree of consanguinity or affinity, to claim a tax deduction of P25,000 in his annual income tax.

He said the proposed tax breaks for the handicapped would align these with the privileges senior citizens enjoy under the Expanded Senior Citizens Act of 2010.

At present, under the Magna Carta for Disabled Persons, PWDs are entitled to a 20 percent discount on certain goods such as medicines, hospital and laboratory work, hotel stay, local transport fares and theater admission.

The bicameral committee added funeral services and burial expenses to the list of assistance to be given to PWDs.,

"So a brother caring for an autistic sibling, or a child who is taking care of a parent who has gone blind, can claim the tax deductible amount of P25,000," Recto said.

He said the bill is in response "to the reality that millions of families today have turned their residences into homes for the aged or infirm."

Recto conceded that the P25,000 which can be deducted from final tax bill barely covers the cost of caring for a PWD. "It is, however, a good start. At least we're ending the government embargo on this kind of tax credit,” he said.

According to the 2010 Census of Population and Housing released in 2013, the Philippines has 1.443 million PWDs, or 1.57 percent of the country's total.

Community-owned local water districts

Meanwhile, Recto said the second bill was expected to "free up money which local water districts can only use in improving the quality or expanding the reach of their services."

He said the bill condoning certain taxes of community-owned local water districts removes the administrative bottlenecks in making this claim.

In 2010, Congress passed what would become Republic Act 10026 which grants income tax exemptions to local water districts, in effect extending to them the same privilege government-run utilities like the Metropolitan Waterworks and Sewerage System (MWSS) was already enjoying.

In addition, RA 10026 condoned the tax obligations of a local water district from August 1996 up to the time RA 10026 took effect in March 2010.

The law, however, imposed the condition that water districts who wish to apply for condonation must prove its financial incapacity to the Bureau of Internal Revenue (BIR). They were also required to submit to Congress a program for “internal reforms.”

The senator said despite the submission by LWDs of these documents, the BIR did not issue the corresponding revenue regulations, rendering the law inoperable.

What the tax agency instead issued was Revenue Memorandum Circular 68-2012, which enumerated the procedure, and the documentary requirements for condonation.

Despite these, 161 water districts “diligently applied for condonation,” with 78, whose unpaid taxes amounted to P842 million, able to comply with the documentary requirements.

Recto said under RA 10026, the condoned taxes can only be spent by water districts for the improvement of their services like the purchase of equipment. “In the end, the people will benefit because taxes foregone are mandated to be plowed back to them.”

He said the measure “will help the 514 local water districts that work round-the-clock so that 20 million Filipinos will have clean water to drink.”

Recto hopes President Benigno Aquino III will sign the two bills before Christmas. —Amita Legaspi/KBK, GMA News