The Duterte administration will limit the incentives enjoyed by senior citizens such as the value added tax exemptions in restaurants under the proposed tax reform program, the Finance Department said Wednesday.
Finance Department spokesman Paola Alvarez said, however, the proposed tax reform program would retain the 20-percent discount and value-added tax exemption on medicine and raw food purchases of senior citizens.
Alvarez said in a statement the proposed tax reform program presented by Malacañang’s economic team to Congress last week aimed to raise enough revenues to fund targeted subsidies for the poorest of the poor.
Alvarez said in lieu of the VAT exemptions to be taken out from other sectors as a part of the proposed comprehensive tax reform program, the government would put in place direct subsidy programs for the benefit of the needy and other vulnerable sectors.
“But the VAT exemption granted to seniors when dining in restaurants, would have to be lifted,” Alvarez said, “because such discounts are usually availed of by affluent senior citizens who can well afford anyway to do away with this privilege.”
She said to better utilize VAT collections, the amount the government would collect from the lifting of VAT exemptions on restaurant dining enjoyed by seniors would be allocated for a fund to provide targeted subsidies to the poor, including indigent senior citizens.
“To clarify our proposal, only the VAT exemptions in restaurants would be removed. The money the government collects from the lifting of the VAT exemptions for senior citizens in restaurants will be used instead to help other senior citizens who badly need the subsidy” she said.
Alvarez said Finance Secretary Carlos Dominguez III made it clear that VAT exemptions on food in its raw form, medicine and education would not be removed because these three essentials were what the poor needed the most.
“The Duterte administration’s tax reform plan does not end with personal and corporate income tax cuts. It also includes revenue-generating measures not only to offset the collections lost from the tax reductions, but also to raise funds for higher spending on infrastructure, human capital and social protection initiatives,” Alvarez said.
She said the additional revenues would help bridge the chronic income gap between Metro Manila and the other regions, which was a way to cut poverty rate from the current 26 percent to 17 percent by the time President Duterte steps down in 2022.
Domiguez earlier said to help fund the massive infrastructure buildup and investments in human capital and social protection under the Duterte presidency, the government would raise the budget deficit to 3 percent of gross domestic product under the 2017 proposed budget, which would “substantially be offset by lower debt service.”
