Alvarez says House to study if DOF tax reform package ‘doable’

Speaker Pantaleon “Bebot” Alvarez on Wednesday said he would study if it would be doable to remove the value-added tax (VAT) exemption of senior citizens and persons with disabilities (PWDs), among other tax reform measures in the proposal of the Department of Finance (DOF).

In an interview, Alvarez said he has yet to look into the proposed tax reform package but added that the lower House would scrutinize the bill if it would be feasible.

“Pinag-aaralan namin ngayon kung doable,” Alvarez said.

But Alvarez said it may be impossible to exempt the elderly and PWDs from VAT.

“Hindi ko pa actually nababasa yung proposed bill nila pero parang
malabo naman siguro kung tatanggalin natin yung exemption,” Alvarez said.

Alvarez said the House leadership would author the DOF proposed version if found that the several tax exemptions are doable.

“Kaya nga nila pino-propose dito sa House para pag-aralan kung doable yung proposal na yun,” Alvarez said.

In the DOF tax reform package submitted to the House ways and means committee Tuesday night, the measure seeks to repeal the laws which have been allowing senior citizens and PWDs VAT exemption—Section 4 of the Expanded Senior Citizens Act and Section 32(a) of the Magna Carta for Persons with Disability.

The proposal is DOF’s offsetting measure as it seeks to lower the personal income tax rate. The proposed tax reform package also imposes additional excise tax on petroleum products.

READ: DOF tax package to remove VAT exemptions on elderly, PWDs

In repealing Section 4 of the Expanded Senior Citizens Act or Republic Act 9994, the DOF’s proposed package would remove the 20 percent discount and VAT exemption being enjoyed by senior citizens on the following services and products:

• medicine
• professional fees of attending physicians and licensed professional health
• medical and dental services
• diagnostic and laboratory fees
• actual fare on land, public utility, mass transit, domestic air and sea travel
• hotels and similar lodging establishments, restaurants and recreation centers
• theaters, cinema houses and concert halls, circuses, leisure and amusement
• funeral and burial services for the death of senior citizens

Meanwhile, the bill would repeal Section 32(a) of the Magna Carta for Persons with Disability or Republic Act 10754, the latest amendment of which was just passed under the 16th Congress and signed into law by erstwhile president Benigno Aquino III.

The deletion of the provision effectively removes the following VAT exemption and 20 percent discount of PWDs on the following services and products:

• fees and charges relative to the utilization of all services in hotels and similar lodging establishments; restaurants and recreation centers
• admission fees charged by theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement
• purchase of medicines in all drugstores
• medical and dental services including diagnostic and laboratory fees, and professional fees of attending doctor
• actual fare on land, public utility, mass transit, domestic air and sea travel
• funeral and burial services for the death of the PWD

The unnumbered bill seeks to amend the National Internal Revenue Code to impose two tax schedules in 2018 and 2019.

The DOF proposed tax schedule for 2018:

• Not over P250,000 – zero percent
• Over P250,000 but not over P400,000 – 20 percent of the excess over P250,000
• Over P400,000 but not over P800,000 – P30,000 + 25 percent of the excess over P400,000
• Over P800,000 but not over P2 million – P130,000 + 30 percent of the excess over P800,000
• Over P2 million but not over P5 million – P490,000 + 32 percent of the excess over P2 million
• Over P5 million – P1.45 million + 35 percent of the excess over P5 million

In the DOF’s proposed tax schedule for 2019, the tax for personal income would further go down:

• Not over P250,000 – zero percent
• Over P250,000 but not over P400,000 – 15 percent of the excess over P250,000
• Over P400,000 but not over P800,000 – P22,500 + 20 percent of the excess over P400,000
• Over P800,000 but not over P2 million – P102,500 + 25 percent of the excess over P800,000
• Over P2 million but not over P5 million – P402,500 + 30 percent of the excess over P2 million
• Over P5 million – P1,302,500 + 35 percent of the excess over P5 million

The bill also repealed the tax exemption on 13th month pay and other benefits not exceeding P82,000 in the public and private sector.

READ: Solons warn DOF tax reform package to pass on burden to consumers 

Finally, the bill would increase the excise taxes on petroleum products, including imposing new taxes on petroleum products that were previously not imposed with excise tax:

• Lubricating oils and greases – P10 per liter (from P4.5)
• Processed gas – P6 per liter (from P0.05)
• Waxes and Petrolatum – P10 per kilogram (from P3.5)
• Denatured alcohol – P6 per liter (from P0.05)
• Naptha, regular gasoline – P10 per liter (from P4.35)
• Leaded premium gasoline – P10 per liter (from P5.35)
• Unleaded premium gasoline – P10 per liter (from P4.35)
• Aviation turbo jet fuel – P10 per liter (from P3.67)
• Kerosene – P6 per liter (from zero)
• Diesel fuel oil – P6 per liter (from zero)
• Liquefied petroleum gas – P6 per liter (from zero)
• Asphalts – P6 per kilogram (from P0.56)
• Bunker fuel oil – P6 per liter (from zero)