Lawmaker pushes VAT reduction

Lawmaker pushes VAT reduction | Daily Tribune

Senator Erwin Tulfo is pushing to reduce the value-added tax (VAT) from 12 percent to 10 percent, citing the rising inflation that hurts Filipinos.

After filing Senate Bill No. 1552 or the VAT Reduction Bill, Tulfo said lowering the VAT will “immediately increase household purchasing power and stimulate consumption,” which will ultimately bolster the country’s Gross Domestic Product (GDP).

“We are among the countries with the highest VAT in Southeast Asia, and this has been a heavy burden to low- and middle-income households because a significant portion of their income goes toward taxes instead of essential needs,” he noted.

Further, the senator said the proposed measure seeks to make the Philippines more competitive among its Southeast Asian neighbors.

Currently, the Philippines and Indonesia impose the highest VAT in the region at 12 percent, while Cambodia, Vietnam and Laos were only at 10 percent.

Other neighbors maintain even lower rates, such as Singapore at nine percent, Thailand at seven percent, Myanmar at five percent (commercial tax), and Timor-Leste at 2.5 percent (sales tax).

To ensure fiscal discipline, the bill includes a safeguard that empowers the President, upon the recommendation of the Secretary of Finance, to temporarily revert the tax to 12 percent.

This trigger would occur if the Development Budget Coordination Committee projects that the national deficit will exceed programmed targets for any given fiscal year.

“Reducing the VAT does not just benefit specific sectors; it covers everyone, regardless of income bracket. Filipinos deserve better, so we should give them more,” Tulfo concluded.

In October 2025, Tulfo recommended a one-month income tax holiday amid the anomalous multi-billion flood control projects nationwide.

Tulfo filed Senate Bill No. 1446, or the “One-Month Tax Holiday of 2025,” as he acknowledged the need for a “far, extraordinary, and immediate form of relief” that will return benefits directly to the people, particularly the working population.

Under the measure, the one-time, one-month income tax break will apply to individual taxpayers receiving compensation income, which will be on the first payroll month immediately following the approval of the bill.

Meanwhile, for mixed-income earners, only the portion classified as compensation income shall be exempted from income tax.