Who should shoulder senior citizen discounts? Business owners weigh in
The rollout of Metro Manila's latest minimum wage increase has prompted some business leaders to revisit another long-standing issue: the cost of mandatory senior citizen and PWD discounts.
Among them is Resto PH president and Mama Lou's founder David Sison, who argued that businesses have long been carrying the financial burden of mandated benefits, including the 20% discounts and VAT exemptions granted to senior citizens and persons with disabilities.
"We are not even asking to stop the benefits. Give them. Our lolos and lolas deserve them. Our workers deserve them. But why is it that every promise the government makes, [businesses pay] for?" Sison wrote in a Facebook post.
He said businesses recover only a fraction of the discounts they grant through tax deductions, unlike the 1992 law on senior citizen discounts, which he said allowed establishments to claim the full amount as tax credits.
Other business owners weigh in
Other business owners, like Philip Castillo, owner of food business Simplado, expressed support for discounts for seniors and PWDs. However, he believes there should be safeguards for micro and small enterprises.
"I fully support giving discounts to our seniors and PWDs—they deserve it. Pero sana magkaroon din ng protection para sa mga small businesses na sobrang liit lang ng profit margin," he said.
Bounty Agro Ventures founder Ronald Mascariñas also weighed in, saying that while the government receives public recognition for the policy, businesses shoulder much of its cost.
"A tax deduction may lower taxable income, but it does not put back the full P20 that the business gave away," he wrote, adding that the burden can be especially difficult for neighborhood restaurants, bakeries, pharmacies, clinics, and other family-run businesses operating on thin margins.
Chef Tatung, the restaurateur behind Tindeli, Pandan, Lore, and Azadore, said the issue extends beyond a single policy. "It's the cumulative weight of many well-intentioned policies landing on the same shoulders."
What the law says
Under Republic Act No. 9257 or the Expanded Senior Citizens Act of 2010, senior citizens are entitled to a 20% discount and VAT exemption on services such as restaurants, hotels, recreation centers, and on the purchase of medicines.
Under Sec. 4 of the same law, "The establishment may claim the discounts granted as tax deduction based on the cost of the goods sold or services rendered."
A revenue officer explained to PhilSTAR Life that the change from tax credit to tax deduction is a way for the Bureau of the Internal Revenue to simplify the tax process, arguing that a tax credit incurred is more difficult to prove and can be used as a deductible to previous tax periods.
He added that the tax deduction incurred from the discount is exempted from value-added tax and is more of a loss for the government as businesses convert the loss to expenses, which in turn will lessen their tax.
Since July 25, the first tranche of the approved wage increase in the National Capital Region took effect, raising the daily minimum by P60.