MikeLigalig.com

BY EFREN L. DANAO SENIOR REPORTER

SEN. Sergio Osmeña 3rd said Tuesday that he would push for the amendment of the Expanded Senior Citizens Act (ESCA) to repeal the exemption of senior citizens from the 12-percent value added tax (VAT). “Everybody should be covered by VAT. Once you make exemptions, government accounting will go awry because VAT has a system of inputs and outputs,” he said.

He said that aside from putting the government’s monitoring of the VAT payments in a mess, the exemption would also erode the country’s tax base.

The ESCA, principally authored by Sen. Pia Cayetano, was meant to restore the original 20-percent discount of senior citizens. The 12-percent VAT had reduced their discount for medicine and other essentials to only 8 percent.

Osmeña said that his proposed amendment would keep the 20-percent discount of senior citizens without exempting them from the VAT.

“We could increase their discounts to 32 percent, and then subject the purchases to the 12-percent VAT,” he proposed.

He said that this way, the net discount of senior citizens would remain at 20 percent in spite of the VAT.

Earlier, he charged that various tax exemptions passed by Congress had cost the government about P100 billion in the last two years.

“From the macro-economic point of view, if we give tax exemptions to everybody who feels they deserve a tax exemption, we will end up eroding the revenue base of government,” he said.

He added that the erosion of this tax base would prevent the government from educating children, from giving enough pay for teachers and doctors.

He said that any tax exemption should be well thought out or it would make the system inefficient.

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