Who should foot the bill in caring for the elderly?

On 17 November 2008, the House of Representatives approved on third and final reading House Bill No. 5210, calling for the removal of the value-added tax (VAT) on the following services for senior citizens: medical and dental services (except the sale of medicine); admission fees charged by theaters, cinema houses, concert halls and other similar places of leisure; and transport fares of elderly citizens.

The measure seeks to ‘correct’ the purported imbalance created by the removal of VAT exemptions on senior citizens’ 20-percent discount as directed by Republic Act No. 7432, as amended by Republic Act No. 9257. The imposition of the 12-percent RVAT reduced senior citizens’ discount to eight percent.

HB5210 is now pending in the Senate Committee on Ways and Means jointly with the Committee on Energy.

On the other hand, HB4530 seeks to exempt senior citizens from paying real property tax (RPT). The measure will accord to stay-at-home senior citizens the same realty tax exempt status given to individuals and institutions establishing retirement homes and communities solely for senior citizens. According to its proponent, Rep. Oscar Malapitan (1st District, Caloocan City), “Almost 90 percent of our senior citizens are living below the poverty threshold set at Php1,000 a month, and would not be able to pay the almost confiscatory real property taxes.”

HB4530 is pending in the House Committee on Ways and Means.

In the Senate, there are various counterpart measures widening discounts and benefits for senior citizens. Senate Bill Nos. 851, 2309, 3061, and 3153 attempts to address the issue of VAT eating into senior citizens’ discounts, while SB 79 focuses on exempting senior citizens from paying RPT.

Financing senior citizens

Latest available data (2000 population census) from the National Statistics Office (NSO) accounts those who are considered as ‘senior’ citizens, aged 60 years old and above under RA7432 as amended, for 5.97 percent of the total population at 4.6 million.

Since the NSO has yet to disaggregate the 2007 population census by age, it is projected that by 2010, the number of senior citizens will total 6.4 million or an increase of 1.8 million.

With this population of senior citizens, both proposals will entail direct costs to the public coffers. According to the Department of Finance, HB 5210 will cost as much as Php130 million annually, while direct costs from HB 4530 will be amounting to Php222.62 billion yearly.

In relation to HB 4530, it also has indirect costs in terms of administrative concerns. For one, determining real property owners falling under ‘senior citizen’ will demand additional inspectors and checkers. Another is the enforcement issue. As pointed out by the National Tax Research Center, the measure may promote pseudo-transfers of property ownerships, wherein families may transfer their properties to senior citizens just to avail of the exemption.

Caring for the elderly is shared responsibility

Our country regards our elders with respect. No less than the Constitution provides that the State has certain obligations to the elderly. Article XIII, Section 11 provides that the State shall have an integrated health development approach where the elderly is among the priority sectors, while Article XV, Section 4 states that while the family has the duty to care for its elderly members, the State may also do so through social security programs.

With these provisions, the overriding concern is thus: How can the State support the elderly without unduly burdening public coffers?

The Constitution says that caring for the elderly is a shared function between the State and the family. It is therefore incumbent for well-off families to pay for taking care of their elderly members. That answers the question of equity: those who can afford should pay.

Only in instances when the elderly lacks any family, or when indigent households care for their elders, can the State intervene. In the short-term, the government can provide discounted medical and dental services in government-owned and public hospitals. For privately owned hospitals, the government can earmark a certain percentage of the VAT proceeds to form a common fund where senior citizens can draw from to pay for services.

Parallel to this, the government should adequately equip barangay health centers with primary and preventive healthcare capacity. In that way, basic illnesses experienced by senior citizens can be treated at the barangay level, which would de-clog hospitals of basic treatment and focus instead in more advanced geriatric illnesses.

The government can also use conditional cash transfers to families caring for their elderly. Through the Office of Senior Citizen Affairs (OSCA), the government can identify households caring for its elderly. With this information, it can target indigent households for direct cash transfers, on the condition that it will ensure the caring of its elderly member.

As a long-term solution, the government must pursue savings promotion to make sure that citizens will have something to draw on when they retire after their productive years.

Further, the government should ensure mandatory membership to the Social Security System or to the Government Service Insurance System to widen its membership base, and ensure that when citizens retire, they will be able to receive benefits for their health and other needs.

On the question of real property, since RPT is a matter for local governments to decide, local government units should be empowered to create rules to further give relief to the elderly depending on the unique circumstances of each locale.

Local governments must also take the lead in giving further benefits and discounts for senior citizens.

Thus, the administration of the OSCA should further be decentralized down to the barangay or sitio/purok level to identify who are the senior citizens in particular localities and where exactly are they found. In that way, targeted interventions for senior citizens will push down administrative costs.

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