Senator Bam Aquino Proposes VAT Reduction to 10% to Counter Middle East Conflict Effects
Senator Bam Aquino has filed a proposed legislative measure seeking to lower the value-added tax (VAT) from the current 12 percent to 10 percent. This initiative aims to cushion the prolonged economic impacts of the ongoing conflict in the Middle East, with a particular focus on providing relief for middle-class families and workers across the Philippines.
Details of Senate Bill 2047
Under Senate Bill 2047, Aquino is proposing amendments to key provisions of the National Internal Revenue Code of 1997. The bill seeks to reduce VAT on goods and services throughout the economy, including petroleum products. This move is designed to offer both immediate financial relief and longer-term economic stability as the nation grapples with rising fuel costs and inflationary pressures.
Aquino emphasized that by lowering the VAT, the measure would help alleviate the burden on consumers, especially the middle class. He noted that this demographic often does not receive direct government assistance despite facing high prices for petroleum products and other essential goods exacerbated by the ongoing oil crisis.
Addressing Broader Economic Concerns
With global oil prices remaining volatile, Aquino highlighted that the economic strain is no longer confined to low-income households. He referenced warnings from the Department of Energy, which indicated that the effects of the Middle East crisis on petroleum prices could persist for six months to a year. In a statement, Aquino explained, "As this crisis continues, it is not only the poor who are affected but also our middle class, including our fellow citizens who are working but are not receiving direct assistance from our government."
Beyond providing immediate relief, Aquino argued that the VAT reduction could help sustain consumer spending in the medium term. He suggested that with increased disposable income, households would be better positioned to support local businesses, thereby helping to protect jobs and stimulate broader economic activity. "By reducing VAT, we take a concrete step toward making the cost of living more manageable and supporting a more inclusive and resilient economy," he stated.
Balancing Fiscal Responsibilities
Recognizing that lowering the VAT could impact government revenues, Aquino stressed the importance of implementing stronger tax administration measures. These include improved compliance and reduced leakages to ensure that public services remain adequately funded despite the potential reduction in tax income.
Aquino has previously been involved in similar economic relief efforts, having co-authored and co-sponsored Republic Act 12316. This legislation grants the President emergency powers to suspend or reduce excise taxes on petroleum products, underscoring his ongoing commitment to addressing economic challenges through legislative action.
