|Photo by Inquirer|
Under the Duterte administration’s proposed “Budget for Real Change,” Dominguez noted that the allocation for indigent senior citizens has doubled from P8.71 billion this year to P17.94 billion in 2017 because of “transparent and targeted” subsidies that the government would be providing them.
Dominguez said that for 2017, the amount allocated for the social pensions of seniors doubled because of expanded coverage. Before 2017, only indigent seniors aged 77 and above were covered by social pensions. President Duterte’s proposed budget now covers seniors 60 years old and above.
This budget hike plan, once approved by the Congress, will increase the number of elderly-beneficiaries from the current 1.4 million to next year's 2.8 million.
Dominguez said the government is not removing benefits for senior citizens under its proposed comprehensive tax reform plan, but is only changing their form and ensuring that these subsidies go to the truly vulnerable ones who need such financial aid the most.
The government, for instance, plans to replace the exemptions to the 12 percent value added tax (VAT) granted to seniors with direct subsidies that would benefit senior citizens belonging to the poorest of the poor, he said.
“For the vulnerable sectors of society who would be affected by the lifting of some of the VAT exemptions, we would design a subsidy system similar to the CCT (Conditional Cash Transfer program), which is more transparent and targeted,” he said.
“As a matter of fact, the 2017 budget for indigent senior citizens has doubled—increasing from P8.7 billion in 2016 to p17.9 billion in 2017,” Dominguez said.
“I would like to emphasize that we are not removing the benefit for senior citizens, only changing its form and providing it only to those who need it the most,” he added.
Republic Act 9994, or the Expanded Senior Citizens Act of 2010—mandates a P500 social pension every month for all Filipino indigent senior citizens. The 2016 budget’s allocation for this subsidy is P8.71 billion, which will go up to P17.94 billion in 2017 under the proposed first General Appropriations Act (GAA) of the Duterte administration dubbed the “Budget for Real Change.”
The allocation for social protection programs under President Duterte’s proposed budget also grew to P169.63 billion, up 6.3 percent from P159.55 billion under the 2016 GAA, according to Department of Budget and Management (DBM) data.
The proposed tax reform program being crafted by the Department of Finance (DOF) aims to raise enough revenues to fund these social protection programs for the poorest of the poor, in step with President Duterte’s 10-point socioeconomic agenda for inclusive growth.
Earlier, DOF spokesperson Paola Alvarez has also clarified that the VAT exemption on unprocessed food and medicines now enjoyed by seniors would remain intact.
Alvarez said Secretary Dominguez had already made it clear that VAT exemptions on food in its raw form, medicine and education would not be removed because these three essentials are what the poor need the most.
In lieu of the VAT exemptions to be taken out from other sectors as part of the proposed comprehensive tax reform program, the government is putting in place direct subsidy programs targeting vulnerable sectors, she said.
“But the VAT exemption granted to seniors when dining in restaurants, would have to be lifted,” Alvarez said, “because such discounts are usually availed of by affluent senior citizens who can well afford anyway to do away with this privilege.”
“In order to better utilize VAT collections, the amount that the government collects from lifting of VAT exemptions on restaurant dining enjoyed by seniors would be allocated for a fund that would be used to provide targeted subsidies to the poor, including indigent senior citizens,” Alvarez said.
“To illustrate, a senior citizen who can afford to eat at a fancy restaurant that charges him with a bill of 1,000 pesos, the exemption from VAT he will get is 120 pesos,” she said.
“Now, this amount of 120 pesos is something he doesn’t really need because he can afford to spend 1000 pesos for a meal.”
“Now, if we compare this to a senior citizen who has to make ends meet for him to be able to afford his maintenance medicine, the 120 pesos saved for VAT would go a long way. This is how we want to distribute a little wealth through taxation,” she said.
“The Duterte administration’s tax reform plan does not end with personal and corporate income tax cuts,” Alvarez said. “It also includes revenue-generating measures not only to offset the collections lost from the proposed tax reductions, but also to raise funds for higher spending on infrastructure, human capital and social protection initiatives,” Alvarez said.
She said the additional revenues would help bridge the chronic income gap between Metro Manila and the other regions, which is one way to cut the poverty rate by 1.5 percent per year from 26 percent in 2015 to only 17 percent by the time President Duterte steps aside in 2022. AJRSP