By Mario Casayuran
Sen. Risa Hontiveros on Wednesday called on her colleagues in the 24-member Senate to deliberate on the Senate floor and pass Senate Bill No. 1671. known as the “Bawas VAT” bill, to provide relief for those in the lower economic ladder of the population affected by the Tax Reform for Acceleration and Inclusion (TRAIN) law by lowering the existing VAT rate to 10 percent from the current 12 percent.
Hontiveros expressed hopes that enactment of her bill into law would enforce a progressive reduction in the VAT rate reducing it to 10 percent effective January 1, 2019.
By January 1, 2022, Hontiveros said, the measure would again reduce the rate of Value Added Tax (VAT) to eight percent 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 four point five percent (4.5%) as a percentage of Gross Domestic Product (GDP)
This would align the country’s tax system with the Association of Southeast Asian Nations (ASEAN) region, she 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.
Hontiveros emphasized that the TRAIN law has a big uncompensated impact on large families and individuals earning less than a minimum wage.
‘’The law is asking people who have already suffered so much in life to make more uncompensated sacrifices,’’ she said.
‘’In fact, according to our own estimates, using the DoF’s (Department of Finance’s) own microsimulation, 1.7 million “near poor” wage earners are in danger of becoming poorer. The cash transfers provided by the TRAIN bill to cushion the impact of the new tax measure to the poor are not enough,’’ she said.
‘’Even the lowered personal income tax, while laudable, and something which I supported, is not enough to protect the poor from this new tax measure. We have to remember that majority of the poor have no personal incomes in the first place,’’ she added.
‘’On the other hand, to those who will benefit from lowered personal income taxes, whatever additional take-home money they will have will be eaten away by soaring prices of commodities,’’ she said.