No tax holiday on school supplies

MANILA, Philippines - The government has thumbed down tax holiday or exemption on school supplies and apparel to ease prices in time for school opening.

Finance Secretary Cesar Purisima, in a statement released by the Palace, said “we should avoid sectoral tax holidays or exemption because they make tax administration difficult.”

“If we want to help a sector, we prefer subsidies - we will be assured that the benefits get to the intended beneficiaries and there is automatic review every year through the budget process and minimizes as the VAT (value added tax) chain is kept intact,” Purisima said.

The administration has also been rejecting calls to scrap VAT on oil, saying it would be better to provide transport subsidies and reach the targets for assistance.

Two lawmakers have proposed to make school items and school apparel exempt from VAT during weekends in the month of May to give families a break on spending in preparation for the opening of the school year.

According to Buhay Party-list Reps. Irwin Tieng and Mariano Michael Velarde, the VAT-free weekends for these school items would help taxpayers save money and enable retailers to lure more customers.

The proposal embodied in House Bill No. 5611 provides that the tax holiday shall start at 12:01 a.m. on the first Friday of May and end at 11:59 p.m. on the first Sunday of May.

He said school supplies that should be VAT-free would range from binders and crayons to instructional materials, while school apparel would include items primarily worn for an educational institution which include school clothing material, ready-made uniforms and accessories, school shoes, and school physical education and sports kits.

Velarde said their proposal would enable the government to give back to the people, especially those with children.

The VAT-free weekend shall only be imposed on covered items with a purchase price of not more than P1,000 each. The maximum total amount of purchases for each receipt shall not exceed P10,000 according to him.