Villanueva: Lower VAT rate is better than P25 wage hike

Lowering the value added tax (VAT) rate is better than the P25 minimum wage increase.

This according to Senator Joel Villanueva, chairman of the Senate committee on labor, reacting to the approved P25 daily pay hike for workers in the National Capital Region (NCR).

Villanueva believes that the increase was “inadequate.”

“This is inadequate considering the continuous increase in the prices of goods,” he said in a text message to reporters on Monday.

While he lauded the government’s decision to suspend the next scheduled increase on excise tax on fuel in January, the senator said prices would still continue to increase because of other factors contributing to inflation.

“The most sensible solution for this is to lower the VAT rate from 12 percent to 10 percent. This will have a better effect than a wage increase of P25,” Villanueva said.

Senate President Vicente “Tito” Sotto III, meanwhile, welcomed the P25 minimum wage hike .

Asked if the approved increase was enough, Sotto said, “For the moment, if that is what is affordable given the present situation.”

On Monday, Labor Secretary Silvestre Bello III announced that the daily pay in the NRC would be raised from the present P500 to P537.

Aside from the P25 increase in the basic pay, minimum wage earners would also receive a P10 cost of living allowance (Cola). /je

READ: DOLE raises NCR minimum wage to P537 with P25 hike