Rep. Leviste: Lowering VAT to 10% should be top tax bill in 20th Congress

MANILA, Philippines –  Batangas 1st District Representative Leandro Legarda Leviste has filed House Bill No. 4302 to lower the Value-Added Tax (VAT) to 10% and moved on Wednesday that this be at the top of the agenda of the Ways and Means Committee for the 20th Congress.

Leviste made the motion during a Ways and Means Committee hearing with the Department of Finance (DOF) on priority tax measures.

Leviste is vice chairman of the House Ways and Means Committee, which handles the financial affairs of the national government, including taxation.

“I move that we put lowering the VAT at the top of the agenda of the Ways and Means Committee of the 20th Congress. In line with this, I have filed a bill to reduce the VAT to 10%, which could reduce VAT collections by P200 billion or an average of P7000 per household per year. How we will offset these foregone revenues can be the subject of further discussions, but we should have the options by our next meeting, and we should pass the bill lowering the VAT by the end of this year,” he said.

Leviste asked House Ways and Means Committee Chairman Miro Quimbo, “Mr. Chair, can we get your best effort that the Ways and Means Committee will pass a bill to lower the Value-Added Tax to 10% by the end of this year?”

“You will have our super best effort,” Quimbo answered.

Quimbo previously stated that “If there is any tax measure we will churn out, it has to be progressive. Progressive meaning, we tax those who have the capacity to pay, and we try to lessen the indirect taxes that really hit the poor.”

“Lowering the VAT is a more efficient way to give Filipinos more disposable income, increasing consumption and our country’s GDP, and I believe that the vast majority of our constituents will benefit from replacing Value-Added Taxes with more progressive measures,” Leviste added.

House Bill No. 4302 gives Congress flexibility on how to offset the foregone VAT revenues, and instead provides that the President, upon the recommendation of the Secretary of Finance, can decide on the implementation of the reduction in VAT based on the country’s deficit-to-GDP ratio.

The Philippines has the highest VAT in Southeast Asia at 12%, compared to approximately 11% in Indonesia, 10% in Vietnam and Cambodia, 9% in Singapore, 7% in Thailand and Laos, 6% in Malaysia, 5% in Myanmar, and 2.5% in Timor-Leste.