DOF: Sales discounts, not tax breaks for oldies

The Department of Finance prefers widening the coverage of senior citizen discounts on purchases of medicines over the expanded value-added tax (E-VAT) exemptions. Finance Assistant Secretary Teresa Habitan said this is the preferred route the Finance Department wants to take in helping senior citizens. She said E-VAT exemptions on most goods and services, including hotel services, are less applicable to most senior citizens who do not usually avail themselves of anymore. The DOF wants E-VAT exemption fro senior citizens recalled, surmising that senior citizens do not themselves actually avail themselves of hotel services and the like. According to estimates made by the department, the Expanded Senior Citizens Act of 2010 would result in a revenue loss of P1.68 billion a year and would complicate the administration of the E-VAT, a sales and service tax. “This is not the only way to help senior citizens," Habitan noted. Under the new law, the sales and service tax exemptions apply to medicines, accessories, and equipment, as well as fees of attending physicians, medical and dental services, diagnostic and laboratory works, and public transportation fares. The discount also applies to admission fees to cinemas, leisure and culture venues; hotel and restaurant service and similar establishments, and funeral and burial services for senior citizens. During deliberations on the E-VAT, what the senior citizens had lobbied for were discounts on their purchases of medicines, the Finance Department said. Since the Expanded Senior Citizens Act of 2010 is already in place, government would have to push for amendments in to recall the E-VAT exemptions, Habitan said. In lieu of the proposed VAT exemptions, the department said it supports increasing to 30 percent senior citizens’ discounts from 20 percent. The Aquino administration is stepping up efforts to plug revenue loopholes, with the 2010 deficit expected to hit P325 billion or 3.9 percent of gross domestic product. The deficit stood at P269.8 billion as of end-November. – MRT/VS, GMANews.TV