The Bureau of Internal Revenue (BIR) said that the national government’s revenue collection is expected to decrease significantly should the proposed measure, which removes the 12 percent value-added tax (VAT), be approved and enacted into law.
Noting that a striking portion of the agency’s collection is derived from the tax intake, BIR Commissioner Romeo Lumagui Jr. said the decision ultimately rests with the government’s economic managers.
‘Of course, collections will decrease since a significant portion of the government’s revenue currently comes from the VAT,’ he told The STAR. ‘It is substantial because a large percentage of the BIR’s total collections comes from the said tax program.’
Cavite Rep. Francisco Barzaga filed House Bill 5119, on Monday, proposing the removal of the 12 percent VAT on all goods and services, aiming to ease the tax burden on consumers nationwide.
In his explanatory note, the politician stated that the tax places a burden on consumers, particularly low- and middle-income families, as it is imposed on goods and services regardless of their ability to pay.
Pressed on whether Lumagui is in favor of removing the tax, the BIR chief said it would be difficult to comment since the agency only serves as the implementing body tasked with carrying out government policies.
‘It is difficult to comment on the matter since we are only the implementing agency,’ he said.
‘Also, it is really up to the economic managers at the Department of Finance to make the estimates on the potential impact of the removal of the VAT and their plans for the economy of our country,’ Lumagui added.
Based on the latest Bureau of the Treasury data, the BIR has collected P2.14 trillion from January to August this year. The revenue pile is 11.4 percent higher than what the agency collected in the same period last year at P1.92 trillion.
The VAT on goods, introduced in the Philippines in 1988, increased to 12 percent in 2005.
Batangas Rep. Leandro Leviste also recently proposed reducing the VAT by two percentage points to 10 percent.