VAT exemptions for seniors, PWDs to stay in tax reform

THE Department of Finance (DoF) is revising its personal tax reform proposal to keep the value-added tax ( VAT) exemptions enjoyed by senior citizens and persons with disabilities (PWDs), according to Senate committee on ways and means Chairperson Juan Edgardo M. Angara.

“The DoF is open to retaining the VAT exemption of senior citizens and PWDs,” said Mr. Angara, who was one of the authors of the Expanded Senior Citizens Act of 2010 that granted the senior citizen VAT exemptions. Mr. Angara also sponsored the amendments to the Magna Carta for PWDs, to whom similar exemptions were extended.

“This means that the administration is listening to our people. We are continuing to engage our economic managers to come up with a comprehensive tax reform program that is fair, progressive, and won’t burden the ordinary citizens.”

Sought for comment, DoF Undersecretary Karl T. Chua confirmed the department is amenable to retaining these exemptions.

“Yes, we are [ amenable], so long as we have a national ID to control the leakage,” Mr. Chua said in a phone interview.

“We will keep [ the exemptions] as is, for the PWDs and seniors, we just want to manage the leakage by having the national ID as a basis to identify the seniors and the beneficiaries.”

“We are only retaining the senior and PWD exemptions,” he added in a text message. “The other [measures] remain as proposed.”

The DoF’s original proposal for its first tax- reform package aims to lower personal income tax but offset forgone revenue through the broadening of the VAT base and adjusting excise taxes on petroleum products and automobiles.

Mr. Angara in an interview said there are enough measures in the DoF’s tax reform package to offset the revenue lost from lowering personal income tax even if the exemptions are retained.

“I think there’s enough in their package to compensate for any possible losses,” he said.

“The seniors and the PWDs, [the DoF] definitely won’t pursue that.”

According to the DoF, VAT leakages from exemptions extended to senior citizens cost the government approximately P9.6 billion in forgone revenue annually.

These leakages have been attributed to non-seniors benefiting from the said exemptions.

The Senate ways and means committee will have its next hearing on personal income tax reform on Jan. 25.

For its part, the House is considering more alternatives to improve tax collection, said Quirino Rep. Dakila Carlo E. Cua, chairman of the House committee on ways and means.

Mr. Cua told reporters on Monday that aside from establishing electronic data linkages between the Bureau of Internal Revenue (BIR) and cash register machines, other options like fuel marking and online receipts are also being studied.

“Marami pang iba, meron ’ yung fuel marking as against smuggling of petroleum, meron ’ yung electronic receipts para ’ yung mga online transactions magkaroon ng resibo (There are a lot more, such as fuel marking as against smuggling of petroleum, and electronic receipts so online transactions will have receipts),” the lawmaker said.

Last year, the committee approved House Bill No. 4601, filed by Mr. Cua, which seeks to link BIR and business establishments using cash-register machines and point-of-sales for simultaneous reporting of sales and purchase data.

The House had earlier pushed for tax administrative measures to be included in the DoF’s original tax package, but Mr. Cua said it was not that easy to approve a tax package with a large scope. He suggested filing separate bills that the House can transmit right away to the Senate.

“Hindi ganun kadaling ipasa ang isang package na malaki at malawak, so that’s why since this is an efficiency measure, hiniwalay na namin para at least hindi na siya maghihintay. So kung pumasa na dito, maipapadala na sa Senate. ’Yun ’yung inaasahan natin para hindi na niya hintayin ’ yung package ( It’s not easy to pass a huge package with a wide scope, so that’s why since this is an efficiency measure, we decided to file it separately so it will not wait. So if we passed it here in the House, we can send it right away to the Senate. That’s what we are expecting so there would be no need to wait for the package),” the legislator said.

Mr. Cua noted the DoF’s scheduled briefing today on the revised first tax package that it submitted to Congress last December. He said his committee will still hear the DoF’s proposal to impose excise oil and petroleum products despite the opposition of House Speaker Pantaleon D. Alvarez.

Mr. Alvarez in a radio interview on Monday said the BIR should plug holes in its revenue collection efforts first before Congress considers imposing new taxes on petroleum products.

In his interview with reporters on Tuesday, Mr. Alvarez said will also hear the DoF’s proposal, “but I told Congressman Cua, as the chairman of the ways and means, to look for other means [to cover the losses] and as much as possible not to impose taxes on petroleum.”