Ilocos Norte Gov. Imee Marcos has urged for the immediate one-year suspension of the value added tax (VAT) on basic food commodities, fuel, and electricity to address the skyrocketing inflation in the country.
“The temporary lifting of the VAT on basic commodities will provide urgent much-needed relief to Filipinos as inflation hit the hardest in the countryside,” Marcos said in a statement released on Friday.
“Filipinos cannot wait for global oil prices to go down. Prices are already too high for Filipinos living below the poverty line. Removing the VAT would lighten the burden on millions of Filipino households,” she added.
The governor proposed substitute measures that can offset the expected revenue loss from her proposed VAT suspension, including a 10 percent improvement in income tax collection.
“A combination of 10 percent improvement in income tax collection, higher absorptive capacity or much less agency underspending, and three other measures can generate P362 billion in revenues. That would replace the VAT that would be missed,” she said.
Marcos cited Bureau of Internal Revenues (BIR) reports which show that if income tax collections grow by 10 percent, the government can earn at least P102 billion in 2018 and P113 billion in 2019.
Marcos said the VAT suspension would run parallel to the anti-inflation measures being implemented by the administration of President Rodrigo Duterte administration and the Bangko Sentral ng Pilipinas.
“It will buy time for the recovery and expansion of the agricultural sector. Filipinos, most especially the poor, will be clear-cut winners if we can suspend VAT for a year as this will bring down the prices of food, fuel and electricity,” the governor said. /muf