Legarda: VAT suspension bill now in Congress

Senator Loren Legarda filed Senate Bill 2043, a temporary measure authorizing the suspension or reduction of value-added tax (VAT) on fuel on 15 April.

Legarda questioned the government’s support in processing the bill, asserting that the administration will likely keep on taxing even in the midst of the crisis. She also said that the administration has an urgency and crisis communication problem.

“There have already been many proposals to temporarily reduce or suspend VAT collection. I already filed it before and refiled it again now, so there are no more excuses,” Legarda said in Filipino.

She also pointed out that during the second PROTECT Senate hearing, oil industry players confirmed that a VAT suspension is both feasible and implementable.

Along with this, Legarda warned that retaining VAT on fuel during a price surge effectively allows the government to earn more as prices rise, emphasizing that relief should be delivered immediately through lower prices, not deferred through subsidy programs.

“If you lower taxes, the effect on prices is immediate. If it’s ayuda, it still has to go through the whole process, verification, and distribution, which takes time. Urgent assistance should not be routed through a slow system when it can directly reduce fuel prices,” Legarda said in Filipino.

Legarda also said that this approach pushes people to endure high gas prices, only for the government to return a portion of that load through ayuda.

“This is not a question of whether funds are available or not. There are already windfall gains, and the government itself has said there is around ₱230 billion in fiscal space,” Legarda said in Filipino.

Additionally, she also revealed that agencies can declare savings from projects that can no longer be implemented this year, such as travel, capacity-building activities, and events, among others.

“Will this be used to immediately ease the burden on the people, or will the crisis continue to be taxed before assistance is returned? For me, hardship should not be taxed,” she asked.

Legarda stated that the issue now revolves around the government’s choice to reduce costs at the source or continue collecting from the same problem at the expense of Filipinos.