Press Release
August 4, 2013

Recto bats for tax deduction for those caring for elderly, disabled

Taxpayers who care for their parents or tend to persons with disabilities should be able to declare them as dependents for the purpose of claiming tax exemptions.

This is according to Senate President Pro Tempore Ralph G. Recto, who filed a bill seeking to remove the limitation on the number of qualified dependents that a taxpayer may claim as tax exemptions and allowing the inclusion, under certain circumstances, of parents and wards.

"I find difficulty in accepting that a taxpayer caring for an ailing parent finds no relief in our tax laws. Sa ilalim ng ating batas, maari tayong kumuha ng tax exemptions para sa ating malulusog na anak, ngunit hindi para sa ating mga magulang na may sakit," the senator said.

"The same goes for an individual looking after a person with physical or mental disability. It is in this area of tax law that we find an evident discord between the status quo and what is necessary given the present realities."

Aptly dubbed as "The Family Care Act of 2013," Senate Bill No. 257 seeks to strengthen the Filipino family by extending tax reprieves to taxpayers who have parents or wards that depend on them for chief support.

"Filipino families care for their elders and for those with disabilities, especially so if they are incapable of caring for themselves. The law should recognize this and grant these families tax reprieves," Recto said.

"Nasa kultura nating mga Pilipino ang mag-alaga ng magulang at ka-pamilya na nangangailangan ng pag-kalinga. Hangga't makakayanan natin ay hindi natin maatim na ipadala sila sa home for the aged o sa hospicio," ayon kay Recto.

The measure expands the coverage of qualified dependents to include parents or both parents with the following conditions: the parent or parents should not be gainfully employed, they should be living with the taxpayer, and dependent upon the taxpayer for chief support; or such parent or parents are incapable of self-support because of mental or physical disability.

"This bill alleviates the financial burden of individual taxpayers who support their parents by allowing them to claim their parents as additional dependents. This would consequently promote the Filipino value of taking care of the elderly," Recto said.

Also, SB No. 257 also proposes that taxpayers who act as legal guardian of a person with mental or physical disability, regardless of age and incapable of self-support, may claim the additional exemption for the said dependent, provided that only the legal guardian can avail of the additional exemption for a particular taxable year to the exclusion of the biological parents.

"It is a fact that the cost of taking care of a person with physical or mental disability is more than the expenses of rearing a healthy one," the senator noted.

Recto said the proposals contained in the bill are consistent with the present charters of the Philippine Health Insurance Corporation (PhilHealth), Government Service Insurance System (GSIS) and the Social Security System (SSS) which do not impose a cap on the number of dependents that can be claimed by the member.

Aside from expanding the definition of qualified dependents under tax laws, the bill also seeks to remove the limitation on how many dependents a taxpayer can declare in order to apply for tax exemptions.

Recto said that at present, a maximum of only four qualified dependents may be claimed by qualified taxpayers as additional exemption at P25,000 per dependent.

"This cap on the number of dependents was established in 1973 under Presidential Decree No. 69. At that time, in addition to generating more revenues, the government was bent on promoting family planning that, in effect, encourages the number of children for each family to only four," he explained.

However, as supported by some economists, setting a limitation on the number of dependents has no clear bearing on the decision of couples to beget children.

"As a matter of fact, those in the higher income levels have fewer children than those in the lower income groups. According to the Commission on Population, most of those who have four or more children are in the lowest and second lowest wealth quartile. These groups are not even income taxpayers," Recto stated.

It included a category of legitimated children in the scope of qualified dependent children, whereby a child conceived and born outside of wedlock, under certain conditions, may be legitimated.

"This bill is tantamount to addressing the inequalities and biases against large families; championing the cause of the mentally and physically challenged and those who take care of them; and supporting taxpayers who have unselfishly taken the cudgels of caring for dependent parents," he stated.

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