Who should pay for the discount

Just a few days ago, the country’s biggest restaurant owners, including those representing leading fast food chains, gathered to discuss proposals in Congress that would adversely impact the industry.

Members of the Restaurant Owners of the Philippines(RestoPH), led by Mama Lou’s Hospitality Group co-founder David Sison, including leaders from Jollibee, McDonald’s, Pizza Hut and KFC, met to “align on pending legislation that will reshape how our industry serves Filipino consumers.”

In his LinkedIn post, Sison said one House bill on their radar would make it uneconomical for restaurants to keep offering promos.

“Promos are not gimmicks. They are volume plays priced at razor-thin margins so that ordinary Filipino families can afford to eat out. Load additional mandated costs onto them and the math stops working. The bill does not ban promos. It simply guarantees they disappear, and when they do, prices effectively rise for the consumers who can least absorb it, transaction volumes fall, and the ripple hits farmers, suppliers, logistics providers, and hundreds of thousands of jobs,” he emphasized.

Sison explained that when the senior citizen benefit was first introduced in 1992, the government funded it and the discount was a fully recoverable tax credit. In 2004, it changed to a tax deduction, and the cost quietly shifted from the national budget to private enterprises.

The senior citizen discount mechanism shifted from a tax credit to a tax deduction primarily to manage public finances, since a tax credit means that the government shoulders 100 percent of the discount cost.

He noted that today, for every P20 of mandated discount, a restaurant recovers only about P5, with the rest absorbed by the business and inevitably, by every other paying consumer.

Sison emphasized that they are not against the benefit since senior citizens and PWDs deserve every peso of it, and more. “Our position is about honest accounting: if Congress wants to expand this benefit, then restore the funding that originally came with it. A mandate without funding is not generosity. It is a cost transfer to other consumers. We are asking our legislators to design this policy with the industry, not around it,” he said.

In an earlier Facebook post, he stressed: “Every time the government announces a new benefit, people celebrate. And they should. Seniors get their discount. PWDs get theirs. Workers get a raise. Beautiful announcements. Press conferences. Applauses. But do you know who pays for it? Not the government. We do.”

He also said that the 2004 amendment removed the income ceiling so that every senior qualified, whether millionaire or minimum wage earner.

“Notice how groceries were treated. In the supermarket, the senior discount is five percent, limited to basic necessities, capped per week, luxury items excluded. There is a design there. A boundary. Someone thought about sustainability. Restaurants got no design. The 20 percent applies to everything on the menu. A wagyu steak, a bottle of wine, a celebration dinner for one – all discounted. If the principle is helping seniors afford necessities, why does the pharmacy have limits and the steakhouse has none,” Sison added.

He urged a return to the tax credit regime and to go back to how RA 7432 originally worked before the burden was moved onto small businesses.

RestoPH also warned earlier about the major struggles facing the restaurant industry, including the high cost of LPG and rising rent and utilities, which have frozen hiring and reduced operating hours for many establishments.

The group has 230 members across Metro Manila, 49 percent of which are small restaurants with one to five branches, according to one report.

Under Republic Act 9994 or the Expanded Senior Citizens Act, senior citizens are entitled to a 20-percent discount and exemption from the value-added tax, if applicable, on the sale of goods and services, including utilization of services in hotels, other lodging establishments, restaurants, and recreation centers.

The establishments may claim the discounts as tax deductions based on the cost of the goods sold or services rendered, provided that the cost of the discount shall be allowed as a deduction from the gross income, and that the total amount of the claimed tax deduction net of VAT, if applicable, shall be included in their gross sales receipts for tax purposes.

If a restaurant has an active promo, seniors may choose either the promotional discount or the 20 percent statutory discount, whichever is higher, but they cannot be stacked.

RA 10754, or the law expanding benefits and privileges of persons with disabilities, also entitles PWDs to a 20-percent discount and VAT exemption on food purchases from restaurants.

Several bills have been proposed in Congress to increase the discount to 30 percent or to allow the statutory discount and VAT exemption to be availed in addition to any prevailing promotional offers or discounts extended by business establishments.

Sison said this matter has become urgent, with House Bill 16 filed by Rep. Martin Romualdez, which will let the 20 percent discount apply on top of promo prices. “I will not fight that bill. If Congress wants to give our seniors and PWDs more, give more. But I ask its authors this: you found the political will to expand the promise, find the political will to fund it. Put the tax credit restoration inside the same bill. Expand the benefit and fix who pays for it.”

“This country just watched a trillion pesos disappear into ghost flood control projects that don’t exist. Yet when we ask government to fund its own discount promise, the answer for 22 years has been ‘walang budget.’ Generosity is easy when someone pays the bill. We are pro discount. The question was never whether the discount should exist. The question is who should pay for it,” Sison pointed out in his FB post

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