Within any society there is a symbiotic relationship between the State/government and its citizens. The State, as parens patriae, is expected to take care of and protect its citizens while the latter, in return, perform certain duties and responsibilities (such as paying taxes, obeying laws, and defending the country in times of war). And like a Venn diagram, these two spheres sometimes overlap. The 20 percent Senior Citizens’ discount provided under RA 7432, as amended by RA 9257 illustrates such a relationship. On the one hand, there is the States’ desire to promote the welfare of a certain class of citizens and on the other, there is an additional obligation imposed on certain taxpayers.
In the original Senior Citizens Act of 1992, the discount granted by a private establishment was actually shouldered by the government as the former was allowed to recover the discount through a tax credit. However, the Expanded Senior Citizens Act of 2003 changed the rule. Instead of being entitled to a tax credit, private establishments may only now claim a tax deduction. The validity of this change as a police power measure was sustained in the 2007 case of Carlos Superdrug Corporation.
Yet sister “death†firms Manila Memorial Park and La Funeraria Paz-Sucat challenged the legality of the new law and its implementing rules arguing that it was the State’s duty to look after the elderly and that the scheme was passing on such duty to the private sector.
The distinction between a tax credit and a tax deduction is plain. Tax deductions reduce the taxpayer’s income. In contrast, a tax credit directly reduces a person’s taxes and may even be refundable. By way of example, suppose you had a gross income of P1 M, a tax deduction of P50,000 and a tax rate of 30%. You would first reduce the P1 M by 50k resulting in a net income of 950k and then apply the 30% rate, resulting in 285,000 tax. Now using the same set of facts except that the 50k tax deduction is converted into a tax credit. You would apply the 30% rate to the P1 M, which amounts to 300,000, and then deduct the 50k credit, leaving a tax liability of 250,000.
In other words, by upholding its constitutionality as a tax deduction, the net effect is that private establishments shoulder 2/3 of the discount while the government only pays 1/3. Does this violate the petitioners’ right to just compensation? Furthermore, query as to whether this contradicts the underlying State-citizen relationship? Can the State “do a Robin Hood†and impose an obligation upon one class of citizens (i.e., private business) to benefit another (i.e., seniors)? And as pointed out, it will be the general public that will eventually shoulder the seniors’ subsidy.
Two other points could also have been considered. First, should the Senior Citizens’ discount still apply to a dead person? I recognize that this is expressly provided in the law but in reality, the discount no longer benefits the senior but the estate and eventually the heirs. And why does a person who dies before reaching the age of seniority not enjoy the same benefit? This is an instance where it pays to die older rather than younger.
Second, the law’s underlying premise is that since seniors are retired and probably without a regular income, they should be assisted by the state. But as I look at my immediate relatives, it is apparent that the first generation seniors are far more â€resource-full†as compared to the second and third generations. I am not certain if this is a rich to middle class phenomenon but it can certainly be argued that a similar discount should be given to young children to help their working parents or perhaps they can amend the law again to make that only the “needy†seniors are provided the discount.
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Greetings: Birth anniversary best wishes to two remarkably “strong†women. Rubi Pantaleon Lichauco has been living in the Boston-Cambridge area for the past 20 plus years. By now, she would have earned a PhD in multi-tasking. Music teacher, choir leader, community organizer, charity fund raiser, family driver, bargain shopper and devoted wife and mother of two kids are just some of her daily duties that come to mind. Year in and out, she has welcomed numerous Filipinos visiting or studying in these college towns. Hence her home has become a haven for Filipino students (especially during bitter winters such as the current one) who do not get to return to the Philippines for the holidays or who may just be craving for home cooked adobo.
Myla C. Villanueva was a pioneer in the Philippine information technology industry. After graduating from Santa Clara University in 1988 (which is near Silicon Valley), she founded MDI, which was the first local network systems integrator in the country. A “serial technopreneur,†she then co-founded Microwarehouse in 1995, and three years later, transformed Wolfpac, a network security company into the largest independent mobile applications and content developer. She then started Meridian Telekoms which was the first to offer wireless broadband services in the Philippines. Wolfpac and Meridian were later on acquired by Smart Communications. Her latest venture is Novare Technologies which is focuses on lifecycle management and transformational technologies and mobility. But the corporate “baby†she seems proudest of is Wireless Wings, an Angel Fund of P111 million, which was launched during her birthday last 1/11/11. The fund seeks to provide not just seed capital but professional guidance to young and deserving technology entrepreneurs.
Nuptial best wishes to Joey Pery and Gretel “T†Dukil who are tying the knot today at Nasugbu, Batangas. Joey has been a classmate since grade six and as this will be his first marriage, chances are it will also be his last. Indeed, he is our last lion who has remained elusively uncaged. And while we continue to profess awe for his past exploits, our greater admiration goes to “T†the lion tamer who has finally conquered this once king of the jungle.
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“Until the lion tells his side of the story, the tale of the hunt will always glorify the hunter.†-Zimbabwean Proverb
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Email: deanbautista@yahoo.com