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Pia: Bicam report on VAT exemption for senior citizens hurdles Senate, House

By Office of Sen. Pia S. Cayetano
January 28, 2010

PASAY CITY  –  Senator Pia S. Cayetano on Thursday hailed the bicameral approval of the proposed “Expanded Senior Citizens Act of 2010,” the measure which seeks to provide relief to the elderly by exempting them from the 12-percent value added tax (VAT) in their purchase of medicines and other services.


Senator Pia Cayetano

The bicameral conference committee report on the disagreeing provisions of SB No.3561 and HB No.5987 was ratified late afternoon on Wednesday by both the Senate and the House of Representatives.

The measure is expected to be transmitted to Malacañang next week for the President’s signature.

Senators had earlier agreed for a ceasefire on fiery debates over the controversial C5 report to focus on important legislation pending before the chamber.

Cayetano, Chairperson of the Senate Committee on Social Justice and principal sponsor of the measure, thanked her colleagues for choosing to prioritize ratification of the proposal.

Reacting to opinions that the bill will result in foregone revenues for the government, Cayetano described the lost income as a “loss that is well-lost.”

She explained that whatever losses the government absorbs would eventually result in increased purchasing power for our senior citizens, which will have a positive impact on the economy in general.

During the public hearings on the measure, the Department of Finance had estimated that foregone revenues from VAT and income taxes for the full effective discount of 20 percent would amount to P54.4 million in the first year of implementation.

But Cayetano stressed: “The limitation with the DOF’s projections is that it fails to reflect the overall benefits to society, and the government itself, of better healthcare and increased economic activity because the capacity of our senior citizens to purchase medicines and other services will be improved.”

Some salient features of the Expanded Senior Citizens Act:

Tax exemption: Purchases made by senior citizens will be exempted from the 12% VAT such that the senior citizens shall enjoy their full 20% discount. Coverage: medicines, influenza and pneumococcal vaccines, and other medical supplies, accessories and equipment; professional fees of attending physicians and licensed professional health workers, medical and dental services, and diagnostic and laboratory fees; actual fare for land transportation travel in public utility vehicles; actual transportation fare for domestic and air transport services and sea shipping vessels; utilization of services in hotels and similar lodging establishments; admission fees in theaters, cinema houses, concert halls; funeral and burial services for the death of senior citizens.

- Sharing of burden: The Department of Health shall establish guidelines and mechanisms of compulsory rebates in the sharing of burden of discounts among retailers, manufacturers and distributors, taking into consideration their respective margins.

Health benefits.

- Free medical and dental services, diagnostic and laboratory fees in all government facilities;

- All indigent senior citizens shall be covered by the National Health Insurance Program of Philhealth; and

- The DOH shall administer free vaccination against the influenza virus and pneumococcal disease for indigent senior citizen patients.

Other privileges. The grant of a minimum of five percent (5%) discount relative to the monthly utilization of water and electricity supplied by public utilities: Provided, That the individual meters for the foregoing utilities are registered in the name of the senior citizen residing residing therein:  Provided, further, That the monthly consumption does not exceed one hundred kilowatt hours (100 kWh) of electricity and thirty cubic meters (30 m³) of water. Provided, furthermore that the privilege is granted per household regardless of the number of senior citizens residing therein.

Penalties. Any person who violates any provision of this Act shall suffer the following penalties:

- For the first violation, imprisonment of not less than two years but not more than six years and a fine of not less than P50,000 but not exceeding P100,000;

- For any subsequent violation, imprisonment of not less than two years but not more than six years and a fine not less than P100,000 but not exceeding P200,000;

- Any person who abuses the privileges herein shall be punished with imprisonment of not less than six months and a fine of not less than P50,000 but not more than P100,000; and

- If the offender is a corporation, partnership, organization or any similar entity, the officials thereof directly involved such as the President, General Manager, managing partner or such other officer charged with the management of the business affairs shall be liable therefor.