The Department of Finance (DOF) on Wednesday officially announced that the exemption from value-added tax (VAT) of senior citizens and persons with disabilities (PWDs) was retained in the revised first package of the government’s proposed tax reform program.
In a briefing of DOF officials before the House of Representatives committee on ways and means, Finance Undersecretary Karl Chua confirmed that, in House Bill No. 4774, it retracted its earlier pitch to remove the exemption on senior citizens’ non-essential purchases, limiting the tax perk to education, raw food, and health products and services.
“Senior citizens and PWDs’ exemption from the VAT will be retained. Our concern originally is the leakage that this creates. However, if we are able to pursue a national ID that will control the leakage, we will be amenable to keeping the exemptions,” Chua told lawmakers as he presented the revised tax reform package.
House Bill No. 4774, or an act amending sections of the National Internal Revenue Code of 1997, is the DOF-proposed tax reform package authored by Rep. Dakila Carlo Cua.
The DOF first submitted a draft of the bill to the Congress in September last year, but lawmakers particularly frowned upon the provision removing the VAT exemption of senior citizens and PWDs. The revised bill seeks to lower personal income taxes, broaden the VAT base, adjust excise tax on petroleum and automobile, and reduce excise and donor’s tax.
Sen. Sonny Angara, chairman of the Senate ways and means committee, said 7.5 million senior citizens and 1.4 million PWDs are currently entitled to the VAT exemption.
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