VAT exemption for senior
citizens to have ‘minimal’
impact on gov’t revenues
MANILA, Philippines - A bill exempting the country’s estimated 4.6 million senior citizens from paying the 12% value-added tax (VAT) on goods and services would have minimal impact on government revenues, government officials said Thursday.
Citing data from the Department of Finance, deputy presidential spokesman Ricardo Saludo said the government would lose only about P1.3 billion in revenues if the Expanded Senior Citizens Act of 2010 is signed by President Arroyo into law.
“In the context of revenue target, it’s not that
big, but let me caution and say that it is still up to the President on
what further action to take,” he said.
The Expanded Senior Citizens Act—amending Republic Act 7432 or the
original Senior Citizens Act—exempts the elderly or those who are 60
years old and above from paying the 12% VAT on medicines; medical,
diagnostic and laboratory fees; and fares for land, air and sea
transport, among others.
Republic Act 7432, which was passed in 1992, already gives senior
citizens a full discount of 20% on the purchase of essential goods and
services.
However, in 1995, RA 9331 or the new VAT law raised the tax rate to 12%, effectively trimming senior citizens’ discount to 8%.
“The new bill just seeks to increase the discount to the original 20%.
The effect (on government revenues) is minimal. It’s not that big. You
have to balance it against the expectations of the people,” said Press
Secretary Jun Icban.
Previously, deputy presidential spokesman for economic affairs Gary
Olivar said that Mrs. Arroyo was reluctant to sign the law because it
would reduce government revenues needed to limit the deficit.
The country’s budget deficit hit a record P293.2 billion or 3.7% of
gross domestic product in 2009, much higher than the government’s
target of P250 billion, a finance official recently disclosed.
This year, the budget gap is seen to reach nearly P300 billion. (abs-cbn)
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