President Arroyo on Tuesday signed into law a bill exempting at least 4.6 million senior citizens from paying 12-percent value-added tax (VAT) on goods and services.

The President signed the Expanded Senior Citizens Benefits Act of 2010 or Republic Act 9994 before she started her Mindanao Agribusiness Tour, which kicked off in Surigao del Norte where she visited the Surigao del Norte College of Agriculture and Technology, Deputy Presidential Spokesperson Gary Olivar said.

“With the signing of the Expanded Senior Citizens Benefits Act, our elderly can now expect additional financial assistance to help them weather the uncertainties of old age in an uncertain global economy,” he said in a statement.

He said the President inked the law despite potential revenue losses amounting to P1.68 billion every year from such tax relief measure for elderly.

The Department of Finance (DoF) recommended to the President to veto the bill because of its impact on the nation’s vault, particularly in its revenue collection.

“The President is fully aware of the fiscal costs of this law, but people should remember that this is only one of the many social services and safety net programs that have been created precisely to spread the benefits of our fiscal recovery to the neediest of our citizens. The President intends to continue looking after the most vulnerable members of the society as she continues to protect the economic gains in her legacy,” Olivar said.

The law, which was signed a day after it was transmitted to the Office of the President, will be enforced 15 days after its publication in national broadsheets, he said.

Under the Republic Act 9257, the original law, senior citizens only get to enjoy an 8-percent discount because of the imposition of the 12-percent VAT, but with the passage of the expanded law, they would enjoy the full 20-percent discount when buying medicines and other products.

Ratified by both Houses of Congress on Jan. 8, the law also entitles indigent or non-pensioner senior citizens to a monthly pension of P500; free medical insurance and disability assistance through PhilHealth, including free anti-flu and anti-pneumonia vaccines; and a P2,000 burial assistance.

The discount also applies in hotels, restaurants and similar establishments; cinemas, theaters and other places of culture, leisure and amusement; and funeral homes.

The elderly continues to receive privileges under the old Senior Citizens Law, which include exemption from the payment of individual income taxes, exemption from training fees for socioeconomic programs; educational assistance to senior citizens who pursue post secondary, tertiary, post tertiary, as well as vocational or technical education in both public and private schools, retirement benefits of retirees from both the government and private sector, and the provision of express lanes in all commercial and government establishments.

Under the new law, senior citizens may also enjoy a five-percent discount on their water and electric bills, on condition that the utilities are in the name of senior citizen and that the consumption is below 100 kilowatt-hours of electricity and 30 cubic meters water a month.

Those establishments found violating any provision of law will be slapped with a penalty of between P10,000 and P50,000, or imprisonment of at least one month but not more than six months.

The principal sponsors of the relief tax measure for elderly are Samar Rep. Reynaldo Uy and Parañaque Rep. Eduardo Zialcita and Sen. Pia Cayetano.

Earlier, President Arroyo signed the Philippine Coast Guard Act to regulate and promote maritime safety standards as well as to boost the capacity of the PCG to address traditional and nontraditional challenges brought by effects of climate change, natural disasters, piracy, transnational crimes and terrorism.

The Coast Guard Act, which formally transfers control of PCG from the Department of National Defense (DND) to the Department of Transportation and Communications (DoTC), was signed by the President last February 12, according to DoTC Secretary Leandro Mendoza.