Senator Panfilo Lacson proposed to reduce the value-added tax (VAT) rate on goods and services from the present 12% down to 10%. Sadly, Senator Sonny Angara said that Lacson’s idea has been disapproved by the Department of Finance on Wednesday.
According to Lacson, the timing is perfect to reduce the VAT for the main reason that the country’s economy is improving with GDP (Gross Domestic Product) growth at 6.9%.
To make up for the lost 2%, amount, he proposed to lift the tax exemptions being enjoyed by some various groups, some of which have been benefitting since 1992. Lacson said the exact words “it’s about time they should get back to the Filipino people, to the tax payers.”
“But tax exemptions covering food, agriculture, health, and education will be retained,” he added.
Other proposals discussed in the Senate include passing on the 2% to the rich and priviledged, to lessen the tax on basic needs of the poor like canned goods, rice, milk and sugar.
However, Senator Angara said in an interview with reporters in the Senate: “Ayaw ng DOF eh” (The DOF don’t like it]. It is because the purpose of the 12% is to raise revenue for infrastructure. So when it is lowered to 10%, the country will lose budget for the infra.
Lacson projected at least P117 billion revenues if 78 of 143 tax exemptions would be lifted, but Angara said the government has already lifted some of these exemptions.
Angara pointed out that even if the 12 to 10% was not approved, “we’re providing more revenues by lifting the tax exemptions on certain sectors.”
Meanwhile, Lacson said that among ASEAN [Association of Southeast Asian Nations] member-states, the Philippines has the highest VAT rate. “Thailand has only 7 percent,” he added.