Bill to reduce VAT by 10% filed in Senate

By Wilnard Bacelonia, Philippine News Agency

(PNA photo by Yancy Lim)

MANILA – A bill seeking to reduce the value-added tax (VAT) from 12 percent to 10 percent has been filed in the Senate on Thursday to help consumers, particularly the middle class, from rising fuel and commodity prices amid the ongoing Middle East conflict.

Senate Bill No. 2047, introduced by Sen. Bam Aquino, proposes lowering VAT on goods and services, including petroleum products, by amending key provisions of the National Internal Revenue Code.

Aquino said the measure aims to ease the burden on households facing sustained increases in the cost of living, noting that middle-income earners are among those most affected as they do not receive direct government subsidies.

“Batay sa pahayag ng Department of Energy, posibleng umabot ng anim na buwan hanggang isang taon ang epekto ng krisis sa Middle East sa presyo ng ating produktong petrolyo at mga bilihin (Based on the Department of Energy, the impact of the Middle East crisis on fuel and commodity prices may last six months to one year),” Aquino said.

“Hindi lang mahirap ang tinatamaan kundi ang ating middle class, kung saan kabilang ang ating mga kababayang naghahanapbuhay ngunit hindi nakakakuha ng direktang tulong mula sa ating pamahalaan (It is not only the poor who are affected but also the middle class, including working Filipinos who do not receive direct government aid),” he added.

Aquino said lowering VAT would directly reduce the cost of goods and services across the economy, including transportation, utilities and basic commodities, helping preserve the purchasing power of households.

He added that the proposed reduction could also support consumer spending in the medium term by increasing disposable income, which in turn may help sustain businesses, protect jobs and stimulate economic activity.

“By reducing VAT, we take a concrete step toward making the cost of living more manageable and supporting a more inclusive and resilient economy,” he said.

The senator said the proposed tax cut should be complemented by improved tax administration to address leakages, enhance compliance and ensure sustainable revenue generation.

Aquino earlier co-authored and co-sponsored Republic Act 12316, which allows the President to suspend or reduce excise taxes on petroleum products during emergencies. He previously filed a measure seeking the removal of excise taxes on fuel under the TRAIN law.