DOF mulls removing VAT exemption of senior citizens

The Department of Finance (DOF) may remove the exemption privilege of senior citizens from the 12-percent value-added tax (VAT), Finance Secretary Cesar Purisima said Tuesday. Taking away the VAT exemption from senior citizens is one of many suggestions from several sectors, including Congress, on how the government can raise revenues and plug the budget deficit, Purisima said. "Kailangan pag-aralan lahat yang mga suggestions na yan (We need to study all of these suggestions)," he said after the Senate's initial hearing on the proposed 2011 budget. Senator Sergio "Serge" Osmeña, who heads the Senate committee on banks, earlier said that the government lost about P100 billion from "idiotic" tax exemptions, specifically the VAT exemption of senior citizens. "If we give tax exemptions to everybody who feels they deserve a tax exemption, we will end up eating, eroding the revenue base of government and that means we won’t be able to educate enough of our children, pay our teachers enough, pay our doctors enough," Osmeña said. But Senator Pia Cayetano, the principal sponsor of the Expanded Senior Citizens Act, said that Osmeña's statement was "sweeping and unfair." She said that Osmeña should not "train" his eyes solely on lost revenue due to the exemption. "The law brings them [senior citizens] improved purchasing power and better health, and comes as a timely relief, especially amid high prices of drugs and prime commodities," Cayetano said. In Tuesday's hearing, Osmeña suggested that if the DOF decides to remove the VAT exemption for senior citizens, it should then increase by 12 percent the senior citizens' discount. "Ang dapat ginawa nila du'n, bigyan ng 32 percent discount ang senior citizens, but not exempt from VAT (They should have just given senior citizens a 32-percent discount, although they wouldn't be exempted from VAT)," he said. Osmeña said that this way, the Bureau of Internal Revenue (BIR) would have a proper audit trail. "Let them pay that para magkakaroon ng resibo at audit trail ang fund (so that there would be receipts and an audit trail for the fund)," he said. —LMR/VS, GMANews.TV