MANILA, Philippines—A key leader of the House of Representatives on Thursday urged President Benigno Aquino III to consider a proposal to reduce the expanded value-added tax (VAT) rate of 12 percent to the lower value simplified tax (VAST) rate of six percent.
Batangas Rep. Hermilando Mandanas, chair of the committee on ways and means, said the VAST bill was the legislature’s contribution to the government effort to lower the budget deficit which runs to over P300 billion annually.
Mandanas batted for VAST following reports that President Aquino was against removing or reducing the VAT as it would not only lead to higher fuel consumption but would cut government revenues to fund vital programs.
With VAST, Mandanas said, “not only will the direct tax payments of Filipinos be reduced, but the revenues of the government will be increased by no less than P50 billion, and corruption will be drastically reduced with the repeal of the input tax credit deductions in the VAT system.”
On Jan. 17, Mandanas wrote President Aquino asking that he certify as urgent House Bill No. 3850, which would impose the VAST in lieu of the VAT.
In the letter, Mandanas said VAST would encourage the “bayanihan” spirit of sharing and engender an equitable distribution of the tax burden between the private sector and the public consumer.
“With VAST, we believe your administration will be true to its word, ‘kung walang corrupt, walang mahirap.’ Through your leadership, we in the House of Representatives are able to best serve the Filipino nation,” Mandanas wrote Mr. Aquino.
“The VAST measure also sends a clear and concrete message that the Aquino administration is sensitive to the needs of the ordinary Filipino taxpayer by reducing their direct tax burden,” he said.
VAST calls for the removal of the input tax credit system, which is multi-layered and provides occasions for graft and corruption, thereby affecting revenue collection.
Mandanas said VAST would increase government revenues by at least P50 billion with both the private sector and the end-consumer sharing the tax burden.