Bataan lawmaker seeks repeal of VAT law to cushion COVID-19 impact

BALANGA CITY, Bataan –– To help cushion the impact of the coronavirus disease (COVID-19), a Bataan lawmaker filed a measure repealing the value-added tax law to reduce the prices of goods and services during the crisis, but with provisions that would not hamper tax collection.

Bataan Rep. Jose Enrique Garcia III filed the bill on May 4, which would restore a four-percent sales tax instead of a 12-percent consumption tax enforced as VAT.

The first VAT law had met stiff opposition from then Bataan lawmaker Enrique Garcia, the father of the incumbent congressman.

In his bill, Garcia said the current tax regime has placed a heavy burden both on government revenues and on taxpayers, who are already struggling to make both ends meet.

Garcia believes that the input tax deduction mechanism generated loopholes in the system that has made it vulnerable to corruption.

“Even before the VAT system could be imposed, however, efforts to suspend or stop its implementation stirred heated debate in the House of Representatives then because of its perceived evil compared to the tax regime it replaced,” said Garcia in a statement.

He said VAT opponents, such as the American think-tank Heritage Foundation, have argued that the tax has increased the expenses of the government.

“This could be attributed to the fact that the VAT is based on a full billing system, which makes VAT implementation expensive,” Garcia added.

“VAT is very inefficient. We are collecting only 3 percent of the 12 percent Vat passed on to consumers,” he pointed out.

“Under VAT, all purchases and sales records are required to be maintained causing an increase in compliance cost,” Garcia asserted.

LZB