Is the discount provision of the senior citizens act regressive? a social impact and expenditure analysis
Date
2013-10
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Abstract
The Senior Citizens Act of the Philippines. grants 20 pet:cent discount on selected goods and services to Filipino citizens aged 60 and above. Our study aims to evaluate the overall social and fiscal impacts of the senior citizens discount on policy. Moreover, we intend to determine whether the senior citizens discount is progressive or regressive. Our hypothesis is that the economically well-off senior citizens benefit more from the privileges granted by the Senior Citizens Act and thus, is regressive. To prove our hypothesis, we examine the consumption expenditure patterns of each income quintile on the goods and services subject to senior citizen discounts. Data from the 2003-2009 Family Income and Expenditure Surveys are used for the analysis. We also devised a mathematical method to determine the revenue foregone by the government because of the senior citizen discount. We find that based on consumption expenditure analysis, the consumption of poor senior citizens of goods and services subject to senior citizen discount is very small relative to more economically well-off senior citizens. Consequentially, the biggest share in the foregone revenue of the government due to senior citizen discount can be attributed to the spending by the economically well-off senior citizens. Therefore, the results suggest that Senior Citizens Act is largely regressive.
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Keywords
Discount, Elderly, Revenue, Expenditure, Consumption