House body OK’s higher tax deductions for firms that hire senior citizens

A HOUSE of Representatives committee on Tuesday agreed to increase to 25% from 15% the tax deductions for companies that hire senior citizens, despite objections from the Bureau of Internal Revenue (BIR).

During a ways and means committee hearing, congressmen said the government should increase the tax on gambling corporations to offset the estimated losses from the proposed tax incentives.

“Why don’t we focus on gambling and gaming corporations as a potential source of extended government revenue?” Party-list Rep. Erwin T. Tulfo told the hearing in mixed English and Filipino.

Aside from the tax deduction, the substitute House bill also seeks to waive the fees on police, National Bureau of Investigation, village and medical clearances for senior citizen jobseekers.

Seniors are also entitled to get birth and marriage certificates and proof of identification free of charge.

The government stands to forego P25.87 billion in yearly revenues because of the higher tax deductions, Donaldo M. Boo, chief tax specialist at the National Tax Research Center, told congressmen.

“The bureau respectfully objects as there is a possibility that our revenue-generating power will be eroded,” BIR lawyer Ron Mikhail Uy told the hearing.

He said the House should retain the 15% tax deduction. “Considering that there is already an existing 15% deduction, may we propose that we retain the original percentage?”

Albay Rep. Jose Maria Clemente S. Salceda said he estimates P3.4 billion in foregone revenue from the tax deductions, much lower than the BIR’s P26-billion estimate.

“The revenue estimates are excessive,” Mr. Salceda, who heads the committee, told BusinessWorld by telephone in Filipino.

The BIR earlier said retailers that plan to honor expanded discounts for senior citizens and persons with disabilities could not claim tax deductions under the law.

Agencies including the Trade department are drafting a joint administrative order increasing the discount entitlement for seniors who buy basic goods.

Under the Expanded Senior Citizens Act of 2010, stores may only claim discounts as tax deductions based on the cost of the goods sold or services rendered.

The law gives seniors a 20% discount and exemption from value-added tax on medicines, hospital fees, medical supplies, fares, hotel, lodging, restaurant meals, theater admissions and funeral services. They also get a 5% discount on water and electricity bills. —