Press Release
May 31, 2010

Pia slams NEDA: "Don't use senior citizens law to justify 15% VAT"

Reelected Senator Pia S. Cayetano today scored the National Economic and Development Authority (NEDA) for blaming the newly signed Expanded Senior Citizens Act of 2010 (ESCA) for government's revenue losses and to justify new tax measures, including raising the Value Added Tax (VAT) rate from 12 to 15 percent.

"The outgoing administration should stop using our senior citizens as its escape goat for the shortcomings of our revenue collection agencies. This tack is not only baseless, but also unfair," said Cayetano, principal sponsor of Republic Act 9994 which exempts senior citizens from paying the 12% VAT.

Cayetano was reacting to a statement by NEDA Director for Policy and Planning Dennis Arroyo who said that the gains of the 12 percent VAT were wiped out by recent laws that granted tax relief, including ESCA and the exemption of minimum wage earners from income tax.

"The IRR (Internal Rules and Regulations) of ESCA is still being finalized and so not a single peso has yet been taken away from government's VAT collections to benefit any of our senior citizens. NEDA's statement is misleading and, coming from government's top economic research and planning agency, disturbingly lacks supporting facts."

She noted that RA 9994 was signed into law last February 16 and won't take full effect until after its IRR is finalized and published next month.

"But what's even more disturbing and unacceptable is (NEDA's) use of our senior citizens to justify hiking the VAT rate from 12 percent and 15 percent," stressed Cayetano, who has an economics degree from the University of the Philippines.

Instead of blaming the elderly and minimum wage earners, Cayetano urged the government to just focus on improving tax collection efficiency, citing its inability to collect P115.9 billion in potential tax and non-tax revenues last year, which contributed to the ballooning budget deficit which hit P198.5 billion by the end of 2009.

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