SENATOR Sonny Angara has expressed opposition to the government proposal to lift the value-added tax (VAT) exemption being enjoyed by senior citizens and persons with disabilities (PWDs) under the law.
Angara was unconvinced by Finance Undersecretary Karl Chua’s justification of the government’s plan to remove VAT exemption for the elderly and PWDs, saying that higher socialized pension and targeted cash transfers are a better option to avoid leakages in the VAT system which have allowed even non-seniors to benefit from the exemption.
During Tuesday’s public hearing on the proposed tax reform package of the Duterte administration, Chua said their proposal is anchored on the “principle of equity and targeted subsidy.”
In response to Chua’s position, Angara said: “But there’s also the principle of compassion. Ayaw naman natin na ang ating mga senior at PWD pa ang inunang tanggalan ng benepisyo.”
He also called on the government to issue the “overdue” implementing rules and regulations (IRR) of the law exempting PWDs from VAT or Republic Act 10754, which he authored and sponsored, and was signed into law in March of this year.
“I would like to see the law implemented first before we even consider its removal. Hindi pa nga nila natitikman yung benepisyo ng batas tapos binabawi na,” said Angara, chairman of the Senate Ways and Means Committee.
The Department of Social Welfare and Development (DSWD) said that the IRR of RA 10754 is now pending “legal clearance” from the finance and health departments, and that they are targeting to hold a ceremonial signing of the IRR during a PWD summit in November.
The Department of Finance (DoF) estimated to save P6 billion from the removal of VAT exemption of seniors and P1 billion from PWDs. There are around 7.5 million senior citizens and 1.4 million PWDs at present.
During the hearing, while senior citizens groups welcomed the plan of the DoF to retain the VAT exemption on medicines only, they sought a wider coverage of the existing pension program of the government.
The broadening of the VAT base is part of the DoF’s first of six packages that seek to increase excise taxes on petroleum products and automobiles to compensate for the P180-billion revenue loss from the lowering of personal income tax rates.
Angara is anticipating longer debates and will conduct more public hearings on such proposal, while the DoF assured the lawmakers that they will further refine their tax reform package.
“This is the just the first hearing on the DoF’s proposal. For now, we are not convinced and the argument still needs to be strengthened,” he said.
“We will not support or make a recommendation yet on the tax reform proposal until we have heard all the affected sectors,” he added.