To give higher 5% price cuts to seniors, PWDs

CAMARINES Sur Rep. LRay Villafuerte is appealing to the Bureau of Internal Revenue (BIR) to consider granting tax credits to supermarkets and other retail outlets that would soon be required to grant the higher discount of 5% on certain groceries or basic necessities and prime commodities (BNPCs) bought by senior citizens and persons with disabilities (PWDs).

“Making price-discounted groceries bought by our seniors and PWDs available for tax breaks or deductions by the supermarkets and other establishments where these were procured will somehow ensure greater compliance by retail outlets once this new policy of a higher 5% discount on such BNPC purchases is implemented, hopefully beginning next month,” Villafuerte, National Unity Party (NUP) president, said.

“If the BIR does not consider granting tax credits to retail outlets, there is a greater possibility for supermarkets or grocery stores to ignore this would-be policy or jack up the prices of their BNPC items to cancel out the discounts of seniors and PWDs who would buy from them,” he added.

Villafuerte said the impending higher discounts on their groceries would be “a welcome relief for seniors and PWDs, more so at this time when the DTI announced upward price adjustments in the coming weeks in over 40 BNPC items, including instant noodles, soap and bottled water.

The Philippine Amalgamated Supermarkets Association Inc. (PAGASA) and the Philippine Retailers Association (PRA) have separately asked for state funding mechanisms such as direct government appropriations or subsidies and tax credits, so as not to burden retailers, especially the small enterprises, with the higher BNPC discounts.

They noted that small retailers already operating now on thin profit margins would struggle to shoulder the extra costs resulting from the higher discounts, and would have to absorb the losses or pass these on to other consumers by raising the prices of their BNPC goods.

Villafuerte, who had authored several laws granting economic benefits to elderly Filipinos and solo parents, supported this tax-credit proposal for the BIR to consider, after Department of Trade and Industry (DTI) officials said last week that the agency would defer to the Bureau on the tax treatment of the higher grocery discounts.

They said the DTI along with the Departments of Agriculture (DA) and of Energy (DOE) would release within the month a joint administrative order (JAO) revising the government policy on BNPC price cuts for seniors and PWDs.

Last week, the DTI, Departments of Agriculture (DA) and of Energy (DOE), and the BIR conducted public consultations on the proposed revisions with the concerned agencies and consumer organizations, as well as with the affected retailers who raised the tax implications of the higher discounts.

Speaker Martin Romualdez announced in February that the DTI had approved his request to nearly double the discounts that seniors get for BNPCs.

Under the proposed JAO, the total amount of special discount on their BNPC purchases shall not exceed P125 per week, without carryover of the unused amount.

At present, seniors can get 5% discounts on BNPCs weekly, for a total purchase value of P1,500, which translates into a maximum discount of P65 per week or P260 monthly.

With the increase to 5% as requested by the Speaker, target beneficiaries would each be entitled to a higher weekly discount of P125 or P500 monthly.

As pointed out by DTI officials, Villafuerte said that although Republic Act No. 9994 or the Expanded Senior Citizens Act of 2010 had classified the 20% discount and value added tax (VAT) exemption of the elderly as tax deductible, this law was silent on the tax treatment of the discounted BNPC purchases from supermarkets and other retail establishments.

“With seniors and PWDs dealing with inflationary pressures like the rest of Filipino consumers, the higher discount of 5% on their monthly groceries certainly is a welcome relief for them,” Villafuerte said. “And to ensure compliance by supermarkets and grocery stores with the higher discounts to be enjoyed by our elderly and PWDs, the BIR will probably need to issue a new RR granting tax credits to these retail establishments for the discounted BNPC purchases.”

Although the Marcos administration has made inroads in taming inflation, Villafuerte said that the rate of commodity price increases rose to 3.4% in February from 2.8% the previous month, largely because of the higher year-on-year increase in the consumer price index (CPI) of food and non-alcoholic beverages.

Villafuerte recalled that following Romualdez’s intercession last January for the increase in the weekly discounts from P65 to P125, the DTI assured the Speaker that the higher price cuts would be implemented as soon as the JAO is issued within this March.

According to DTI Assistant Secretary Amanda Nograles, her office referred to the BIR the concern of retailers with regard to the tax treatment of the new BNPC privilege of senior citizens and PWDs.

Nograles said the BIR could release a revenue regulation (RR) or, together with the DTI, issue a joint memorandum circular on this matter.

“We wrote BIR officially referring the issue of tax treatment,” Nograles was quoted as saying in the media. “It’s clear that the 20% senior discount for restaurants and services, in the law, is supposedly treated as a tax deduction. But it’s unclear in the law what the tax treatment is for five percent special discounts on BNPCs.”

“In the joint AO (with the DA and DOE), we can’t cover the tax mandate because it’s not in the mandate of the DTI. We defer to the BIR on what their official decision will be,” she said.

Nograles said the BIR replied that the Bureau was still studying on whether to issue an RR or discuss with the Congress the possibility of amending RA 9994 for the purpose of clarifying the tax treatment issue.

Earlier, Villafuerte welcomed Romualdez’s proposal to the DTI to almost double the discount cap on the groceries of senior citizens to P500 monthly, as the early dividend of the directive of the Speaker for a congressional review of the laws providing financial benefits to the elderly and PWDs.

Villafuerte is a lead author of RA 11916, or the “Social Pension for Indigent Seniors Act” of 2022, which doubled the monthly pension of indigent elderly Filipinos to P1,000; as well as RA 11982, which granted a cash reward of P10,000 to seniors when they reach 80, 85, 90 or 95 years old.

RA 11982 amended RA 10868, or the “Centenarians Act of 2016,” which granted a cash gift of P100,000 to every Filipino who becomes a centenarian or reaches 100 years of age.

Romualdez had ordered a joint review of laws benefiting the elderly and PWDs by the House ways and means panel with its committees on senior citizens and on PWDs.

Under the current policy, promulgated through DTI-DA Administrative Order No. 10-02, as part RA 9994, seniors are entitled to a special discount of 5% of the regular retail prices, without exemption from the VAT, of basic necessities.

RA 10754, or “An Act Expanding the Benefits and Privileges of PWDs,” meanwhile, entitled PWDs to the same discounts.

Villafuerte had backed, too, Romualdez’s commitment for the House to wield its oversight power to compel establishments to abide by laws granting discounts and other benefits to an estimated 35 million senior citizens, solo parents and PWDs in the country, and possibly even initiate prosecution against errant business enterprises.

He supported the Speaker after the latter had warned non-compliant establishments that the House would not hesitate to exercise its oversight power to force compliance by businesses with laws granting price discounts and other economic privileges to these vulnerable sectoral groups.