VAT system overhaul instead of Trabaho bill — lawmaker

Senator Joel Villanueva wants an “overhaul” of the value-added tax (VAT) system in the country.

Aside from lowering the VAT rate from the present 12 percent to 10 percent, Villanueva also sees the need to rationalize the tax incentives being enjoyed by certain sectors.

Lowering the VAT to its original rate, he said, would result in a P1,252 savings a month for an average family.

He said he based his computations on the Family Income Expenditure Survey of the Philippine Statistics Authority.

“If a family is renting an apartment na P25,000. Ang VAT niyan ay 3,000 at 12% but only 2,500 at 10 percent. That’s a savings of P500 already just from rent,” Villanueva said in a text message on Tuesday,

“That is already equivalent to the wage increase na P25 a day. Wala pa ang impact on other goods and services,” he added.

The proposal to lower the VAT rate was first raised by the senator after the government announced the P25 minimum wage hike in the metropolis.
Villanueva said he would push for his proposal by filing a bill when Congress resumes its session next week.

The measure, he said, would cover the rationalization of VAT incentives, which is also the proposal under the second tax reform package.

The second package was initially dubbed as the Train 2 or the second tranche of the Tax Reform for Acceleration and Inclusion (Train) Act but it was later called the Tax Reform for Attracting Better and High-Quality Opportunities or the Trabaho bill.

“I think all of you would agree with me na marami tayong binibigay na incentives na hindi na naman kailangan. ‘Yung iba to start the ball rolling kaya pinapasok tapos magugulat tayo may forever dun sa incentives na binibigay natin,” Villanueva said in a press briefing at the Senate.

“It’s about time na i-overhaul natin yung VAT system natin…” the senator added.

Villanueva said his bill could be a substitute for the Trabaho bill, which he said was “dead on arrival” in the Senate anyway.

The Trabaho bill, he said, might result in the displacement of many workers if the tax incentives being enjoyed by the business sector would be lifted.

“Train 2, I think is dead on arrival dito na…” he said, noting the timing of the proposal and the failure to fully explain many issues being raised against it.