The Finance Department said Friday it will not remove the tax exemptions enjoyed by senior citizens and persons with disability amid its goal to broaden the value added tax base.
Finance spokesman Paola Alvarez told reporters the agency would retain the 20-percent and 12-percent discount rates for senior citizens and PWDs, respectively.
Finance Secretary Carlos Dominguez III said earlier the government would review the incentive program that cost the government at least P144 billion in tax perks and holidays to businesses.
“This administration is committed to rationalizing tax incentives,” Dominguez said.
“Government provides at least P144 billion in income tax perks and tax holidays. A truly serious study needs to be done about the relevance of many of those tax perks,” he said.
Alvarez said tax incentives for senior citizens and PWDs would not be affected. “We will just broaden the tax base,” she said.
The Finance Department also said it planned to adjust the excise tax on fuel from the current P4.35 to P10 per liter. It also plans to slap excise tax on sweetened beverage to offset possible loses from the planned reduction of individual income and corporate tax rates.
Alvarez said Finance officials already met with Quirino Rep. Dakila Cua, chairman of House ways and means committee, to discuss possible tweaks in VAT exemptions and the broadening of the tax base.
The department said it would submit a tax reform package to the House of Representatives in September but the package would not include an increase in the current 12-percent VAT rate.
Dominguez said he was “inclined against” the proposal to increase the VAT rate and proposed to expand the collection efficiency of the Bureau of Internal Revenue instead.
“There has been a proposal to increase the VAT rate to 14 percent [from the current 12 percent] to offset the income and corporate rate cut. I am inclined against that proposal,” Dominguez said.
“By some estimates, we could double VAT collections simply by being more efficient in collecting it,” Dominguez said.