House minority solons hit DOF plan to remove VAT exemption for seniors

Two congressmen from the "Legitimate 8" minority bloc on Tuesday opposed the Department of Finance's plan to remove the exemption of senior citizens from paying value-added tax (VAT).

Albay Rep. Edcel Lagman, himself a senior citizen, said removing VAT exemptions for the elderly would be "completely counter-productive" to a country with an aging population.

Lagman said they earlier conducted a study showing that 10.5 percent of the Philippine population would be aged 60 years old and above by 2025. The lawmaker did not give further details on the study.

On Monday, the DOF submitted to the House committee on ways and means the Duterte administration's proposals to reduce the personal income tax (PIT) and expand the VAT base as part of a comprehensive tax reform package.

The DOF proposed to expand Value Added Tax (VAT) from 12 to 14 percent and remove exemptions replacing with direct subsidy.

The lawmaker lamented how the DOF tax reform proposal was filed on the same day the Implementing Rules and Regulations for Republic Act 10868 or the Centenarians Act of 2016 was signed.

Under the new law, all Filipinos in the Philippines or abroad who reached 100 years old and above will be granted a Centenarian gift of P100,000 cash and a Letter of Feliciation signed by the President.

Lagman said the new law "gives focus on the socio-economic problems arising from an aging population." He said VAT exemptions and Philippine Health Insurance coverage for senior citizens are among the measures helping ease these problems.

"The government should address the problem of our rising elderly population... The United Nations even suggested that states should pursue policies to enhance active aging through better family relations, social interaction, economic independence of the elderly, and participation in community activities," he said.

For his part, Northern Samar Rep. Raul Daza, also a senior citizen, referred to a note from President Rodrigo Duterte that accompanied the presidential budget proposal he sent to Congress.

"This is what he said. In the conclutionary [sic] 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,'" recalled Daza.

"If we talk of human approach, we talk of that kind of approach that is conformable to our culture," Daza added, saying that senior citizens are held in high-esteem in Philippine culture.

He said: "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." Daza said withdrawing tax exemptions for elderly would be "cruel."

The lawmakers said the government can instead look for other sources of revenues like reviewing exemptions in corporate taxes and closely monitoring the taxes of professionals.

Part of the tax reform package being pushed by the DOF is a proposal to adjust the excise taxes on petroleum products.

The DOF earlier said it plans to raise the excise tax on gasoline to P10.00 per liter from P4.35 per liter, and diesel – which is currently at zero– to P6.00 per liter.

The DOF proposal covers the restructuring of the excise tax on automobiles except for buses, trucks, cargo vans, jeeps, jeepney substitutes and special purpose vehicles.

According to the DOF, the net gain from the proposed tax reforms will be allotted to the conditional cash transfers, lifeline electricity subsidies, direct discounts, and higher PhilHealth coverage for those affected by new fuel prices with the excise tax adjustments.

The additional revenue will also be used to boost spending under the Duterte administration. — RSJ, GMA News