The Finance Department said it will rationalize the value added tax exemptions enjoyed by senior citizens to make sure the tax reform program will be fair to all.
Finance Secretary Carlos Dominguez III told reporters the agency wanted the tax reform package to be enjoyed justly by the public.
“Now on that VAT on senior citizens, let us analyze it. Where do you use that? You use that in expensive restaurants. I go by a meal that is P1,000. So I get a subsidy of P120 because I don’t pay the VAT. But the guy who needs the P120 cannot get it because he doesn’t have to money to pay an expensive meal,” Dominguez said.
“Now is that fair? Is it? If you put it in that way, we want it to be fair. Why should I or he or she be subsidized when that guy cannot get it,” Dominguez said.
The Finance chief said the tax reform package aimed to make sure the government had enough funds to make the necessary investments in infrastructure, education and health and while being fair to all.
The Finance Department earlier confirmed that while the government would broaden the tax base to compensate for losses from the possible tax rate cuts, several tax exemptions would be lifted.
Dominguez said tax exemptions on food, medicine and education would not be affected. “Those are very necessary,” he said.
The department said despite the proposals to reduce income tax rates, the government would have enough revenues to support the program of the Duterte administration.
“We are preparing our tax reform program that will lower tax rates for individual and corporations. However, we have counter measures to cover those erosions in revenue and we will certainly end up with more revenue in the long run,” Dominguez said.
The Finance Department plans to submit the tax reform package to the House of Representatives in September. The tax reform package includes the reduction of corporate and individual tax rates from 30 percent to 25 percent and from 32 percent to 25 percent, respectively.