FEB.

29, 2012 DATE

NR # 2694B
REF. NO.

House to investigate impact of the Expanded Senior Citizens Act of 2010 on small and medium-sized drugstores
A lawmaker has asked the House Committee on Small Business and Entrepreneurship Development to conduct an inquiry on how Republic Act 9994 otherwise known as the Expanded Senior Citizens Act of 2010 affects the small and medium-sized drugstores in the country. Rep. Teddy Casio (Party-list, Bayan Muna), author of House Resolution 2099, urged the House body to help small and medium-sized drugstores comply with the mandated discount for senior citizens and at the same time ensure their viability as a business enterprise. This is an urgent matter lest the small drug retailers, who number in thousands disappear, leaving a large vacuum in the drug and medical supply claim and leading to the loss of jobs of thousands of employees, Casio said. Casio said Republic Act No. 7432 or the Senior Citizens Act was passed into law in 1992 providing a 20% discount on drugs purchased by senior citizens whose annual income falls below P60,000. To compensate drugstores, claim reimbursement is supposed to be given in the form of tax credit. Casino said the Drugstores Association of the Philippines (DSAP) have questioned the implementing rules and regulations issued by the Bureau of Internal Revenue (BIR) because it treated the tax credit provision as tax deduction only. This was questioned by Mercury Drug Corp. and in April 2005, its franchisee Central Luzon Drug Corp. won the case. However, the DSAP said that drugstores has since hesitated to comply with the 20% discount, Casio said. Casio said DSAP members have been complaining that small and medium-sized drugstores cannot comply with the stringent provisions of the Senior Citizens Act. They explain that such drugstores set their mark-up at 5 to 10 percent only, such that a 20% drastically eats up their capital. They further claim that the shift to tax deduction from a tax credit scheme does not justly compensate drugstores as contemplated in the law, citing that they get reimbursed an amount equivalent only to 32% of the discount and they are forced to shoulder 68% of the discount given to the beneficiaries, Casio said. Casio said while it is the intention of Congress to provide our senior citizens free or affordable health care and medication, it should also be reconciled with the support needed by small players in the drug industry, especially if it may cost their financial ruin. Casio said the Senior Citizens Act was expanded in 2003 as Republic Act No. 9527, removing the income cap of P60,000, replacing the tax credit provisions with tax deduction and providing for stiffer penalties including imprisonment of drugstore owners. This was further amended in 2010 as Republic Act 9994, effectively exempting the purchase of senior citizens from value-added tax (VAT). (30) lvc