Senator Risa Hontiveros wants to reduce the Value Added Tax (VAT) rate to 10% from the current 12% to address the negative effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
She filed on Tuesday Senate Bill No. 1671 or the “Bawas VAT” bill which seeks to provide relief for the poor sector affected by the TRAIN law by lowering the existing VAT rate to 10%.
“The government said that the TRAIN law will be beneficial in the long term. Ika nga nila, the people must make short term sacrifices for long term gains,” Hontiveros said.
But the truth is, the TRAIN law “has a big uncompensated impact on large families and individuals earning less than the minimum wage,” she said.
“We are asking people who have already suffered and sacrificed so much in life to make more uncompensated sacrifices. This is simply unjust and unsustainable,” Hontiveros said.
“It’s time we strengthen the people’s purchasing power. It’s time for the public to cut clean from regressive taxation. It’s time to cut the VAT,” she added.
Once her bill is passed, she said the measure will enforce a progressive reduction in the VAT rate by immediately reducing it to 10% effective January 1, 2019.
By January 1, 2022, the measure will again reduce the rate of VAT to 8% should the previous year’s realized revenues from VAT reported in the budget of expenditures and sources of financing submitted to Congress equal or exceed 4.5% as a percentage of Gross Domestic Product (GDP).
Hontiveros noted that she was the “lone dissenter” to the Senate version of the TRAIN law when it was passed on third and final reading in the upper house.