House panel OKs VAT exemption, higher discount for senior citizens' electricity, water bills

The House Ways and Means Committee approved the tax provisions of the measure which seeks to increase the rate of discount being granted to senior citizens on their monthly electric and water consumptions.

The substitute bill to House Bills 1903 and 3040 was approved during a panel meeting on Monday. It seeks to amend for the purpose Republic Act 7432, as amended, otherwise known as the Expanded Senior Citizens Act of 2010.

The tax provision states "the grant of a minimum 10% discount relative to the monthly utilization of water and electricity supplied by the public utilities and exemption from the value added tax: Provided, that the individual meters for the foregoing utilities are registered in the name of the senior citizen residing therein: Provided, further, that the monthly consumption does not exceed 150 kwh of electricity and 30 cubic meters of water."

"Provided furthermore, that the privilege is granted per household regardless of the number of senior citizens residing therein and that the registered senior citizen continues to live within the household address."

The Department of Finance (DOF), however, raised concerns on the proposed measure, noting that this could lead to abuses by some households.

"First, the proposal may be inconsistent with the objectives of the TRAIN Law to improve the efficiency of the VAT system as it adds exemptions to a specific group of individuals," DOF's Lyonel Tanganco said.

"We're concerned that the proposal may result in tax leakages, abuses, and more complicated tax administration. One possible leakage is when household continue to enjoy the proposed benefit even if the declared senior citizen under whom utilities is registered is no longer living," he added.

Tanganco also said some could register multiple utilities under the name of the senior citizen in order to avail of the said discount. He said the best way to help senior citizens is to collect VAT and spend revenues on social services, which the national government is presently doing.

Nueva Ecija Representative Estrellita Suansing, one of the authors of the bill, said this is beneficial for senior citizens who are only relying on their pensions and the contribution of their children who are still living with them. —KG, GMA News