DOF: Senior citizens' discounts, tax perks to stay

Senior citizens need not worry about the tax reforms of the Duterte administration, as they will continue to enjoy their 20-percent discount on purchases and exemptions from the value-added tax (VAT) on most items.

The proposed tax reform program presented by the Malacañang economic team to Congress last week retains most of the current discounts available to senior citizens, Department of Finance (DOF) Spokesperson Paola Alvarez said on Wednesday.

“The 20-percent discount enjoyed by all senior citizens would remain as well as the VAT exemptions they enjoy for their purchases of medicines and food in its raw form,” she said.

But the government will remove the VAT exemptions senior citizens enjoy from restaurants, to increase revenue collection and help other senior citizens.

“To clarify our proposal, only the VAT exemptions in restaurants would be removed. The money the government collects from the lifting of the VAT exemptions for senior citizens in restaurants will be used instead to help other senior citizens who badly need the subsidy” Alvarez said.

The tax breaks from restaurants are usually obtained by the moneyed senior citizens, Alvarez noted.

“... [T]he VAT exemption granted to seniors when dining in restaurants, would have to be lifted ... because such discounts are usually availed of by affluent senior citizens who can well-afford ... doing away with this privilege,” she said.

Wealth distribution

“In order to better utilize VAT collections, the amount that the government collects from ... restaurant dining enjoyed by seniors would be allocated for a fund that would be used to provide targeted subsidies for the poor, including indigent senior citizens,” she added.

“To illustrate, a senior citizen who can afford to eat at a fancy restaurant thatcharges him with a bill of P1,000, the exemption from VAT he will get is P120. Now, this amount of 120 pesos is something he doesn’t really need becausehe can afford to spend 1000 pesos for a meal,” she said.

Compared with a senior citizen trying to make ends meet, Alvarez said that the P120 would go a long way. “This is how we want to distribute a little wealth through taxation.”

Still, Alvarez noted Finance Secretary Carlos Dominguez III made it clear that VAT exemptions on essentials—food in its raw form, medicine, and education—would not be removed because these are what the poor need the most.

“The Duterte administration’s tax reform plan does not end with personal and corporate income tax cuts. It also includes revenue-generating measures not only to offset the collections lost from the tax reductions, but also to raise funds for higher spending on infrastructure, human capital, and social protection initiatives,” she said.

The DOF plans to submit a tax reform package before the Congress by September this year. 

Among the reforms are lower corporate taxes and widening the tax base. — Jon Viktor Cabuenas/VDS, GMA News