THE group of Philippine retailers is pushing for the adoption of “government-supported” funding mechanisms to ensure that the discounts to senior citizens (SCs) and persons with disability (PWD) will not burden the retail sector, particularly for small-scale and medium-sized enterprises (SMEs).
In a position paper dated March 11, 2024, the Philippine Retailers Association (PSA) considers commendable the “well-intentioned” efforts of the government to provide SCs and PWDs with the “necessary support and privileges.” However, the retailers asserted: “We also believe it is essential to strike a balance between social welfare and economic sustainability.”
“Policies and laws, no matter how noble their intentions, must be carefully crafted to avoid undue burden on sectors that play a crucial role in our economy,” the PRA said through its position paper.
The group of Philippine retailers pointed out that the implementation of Republic Act (RA) 9994, or the Expanded Senior Citizen Act of 2010, “imposes a significant burden” on the retail sector and other related service industries.
The PRA said the current system places the entire financial responsibility of these discounts on establishments. In particular, the business group said SMEs operating on “thin profit margins” would have to shoulder the financial burden accruing to the provision of discounts. The group added these businesses may struggle to absorb the costs associated with the discounts mandated by law.
The PRA issued a position paper after the Department of Trade and Industry (DTI) posted on its website last March 6 the draft Joint Administrative Order (JAO) that increased the special discounts to SCs and PWDs from P65 per week to P125 per week, or a total of P500 per month. The Department of Agriculture (DA) and the Department of Energy (DOE) concurred with the JAO.
Illustrating the potential impact of the increase in special discounts on local retailers, the PRA said, “in many cases, the discounts provided to SCs and PWDs exceed the profit margins of the products or services being offered.” As such, it added, “establishments are forced to absorb losses or pass on the additional costs to other consumers through price adjustments.”
Moreover, the PRA said the practice of giving discounts at risk of revenue loss “undermines the competitiveness of businesses and may lead to adverse effects on employment, investment, and overall economic growth.”
With this, the group said it advocates for the adoption of government-supported funding mechanisms to ensure the “continued provisions” of discounts to SCs and PWDs “without unduly burdening the retail sector.”
“This may involve allocating appropriations specifically earmarked for these discounts or providing tax credits to retailers and establishments that extend these benefits,” read the PRA’s position paper.
The group of local retailers underscored the need to tap into government resources to support these welfare programs, adding that by doing so, “we can achieve a more equitable distribution of costs while safeguarding the economic sustainability of businesses.”
Specifically, the PRA recommended, “Direct appropriations or tax credits are potential avenues through which the government can assist retailers facing challenges in implementing discount programs.”
Direct appropriations, it noted, would involve allocating specific funds to subsidize the costs associated with providing discounts to SCs and PWDs.
On the other hand, tax credits would “incentivize” businesses by allowing them to offset a portion of their tax liabilities based on the discounts they provide.
The PRA has about 1,550 member companies comprising over 6,000 outlets nationwide, according to PRA President Roberto S. Claudio Sr.
At a briefing last Friday, DTI-Consumer Protection Group (CPG) Assistant Secretary Amanda F. Nograles said the DA, DTI and DOE are aiming to sign the new set of rules before the end of March, after which the rules would then take effect immediately.
The CPG official revealed to reporters that some stakeholders have expressed concern on the issue of “tax treatment” on the 5-percent special discount on basic necessities and prime commodities (BNPCs).
Nograles said while the 20-percent discount given by restaurants and services to senior citizen should be treated as tax deduction, RA 9994 is “silent” with respect to special discounts on BNPCs.
However, she said the issue of tax payment is within the mandate of the Bureau of Internal Revenue (BIR). Nograles said the DTI already wrote to the BIR regarding this concern of stakeholders. (Full story here: https://businessmirror.com.ph/2024/03/11/dti-preps-public-hearings-on-bigger-senior-discount/)
The public consultation on granting special discounts to SCs and PWDs on the purchase of BNPCs will run from March 11 to March 12, the DTI said in an advisory posted on its web site.