MANILA, Philippines - The Department of Finance (DOF) prefers to expand the discount on senior citizens’ purchase of medicines over an expanded value-added tax (VAT) exemption.
Finance Assistant Secretary Teresa Habitan said this is the preferred route that the Finance department wants to take to help senior citizens.
As such, the DOF wants the VAT exemption on senior citizens recalled because of the huge revenue losses.
According to estimates made by the department, the Expanded Senior Citizens Act of 2010 would result in revenue losses of P1.68 billion a year and that it would complicate the administration of the VAT. “This is not the only way to help senior citizens,” Habitan said.
Under the measure, the VAT exemption applies to the medicines, accessories and equipment; fees of attending physicians; medical, dental fees and diagnostic and laboratory fees and fares for public transportation.
Furthermore, the discount also applies on admission fees in cinemas, leisure and culture, services in hotels, restaurants and similar establishments and to the funeral and burial services for the death of senior citizens.
Habitan said during deliberations on the expanded VAT, what the senior citizens lobbied for are discounts on their purchases of medicines.
“What they are really after is a discount on their purchases of maintenance medicines,” she said.
However, Habitan said that since the Expanded Senior Citizens Act of 2010 is already in effect, the government would have to push for amendments in the existing measure to recall the expanded VAT exemption.
The Finance department also said that it lieu of the proposed VAT exemption, it supports an increase in the senior citizen’s discount to 30 percent from the existing 20 percent.
The Aquino administration is staring at a widening budget gap that is projected to hit P325 billion this year or 3.9 percent of gross domestic product (GDP) from a previous estimate of P300 billion.
The budget gap in July has already widened the deficit to P229.4 billion as of end-July or 22 percent higher than the P188 billion recorded a year ago.
The budget gap in the first seven months this year was already 70.6 percent of government’s P325 billion ceiling for this year.