Senator Erwin Tulfo has filed a bill seeking to reduce the Value-Added Tax (VAT) from 12% to 10%.

Senator Erwin Tulfo (Facebook)

With rising inflation remaining the top concern for Filipinos, Tulfo said it is imperative to the lower the VAT to “immediately increase household purchasing power and stimulate consumption.”

This, the senator said, will ultimately boost the country’s Gross Domestic Product (GDP).

“We are among the countries with highest VAT in Southeast Asia, and this has been a heavy burden to low- and middle-income households because a significant portion of their income goes toward taxes instead of essential needs,” Tulfo said in pushing for Senate Bill No. 1552.

The Philippines and Indonesia currently impose the highest VAT in the Southeast Asian region at 12 percent followed by Cambodia, Vietnam and Laos at 10 percent.

Other neighboring countries, such as Singapore, Thailand and Myanmar observe lower rates at 9 percent, 7 percent, 5 percent (commercial tax) and Timor-Leste at 2.5 percent (sales tax).

Tulfo further said that the VAT Reduction Bill will not only lighten the load for ordinary Filipinos “but will also make our country more competitive among our Southeast Asian neighbors.”

SB No. 1552 also includes a safeguard that empowers the President, upon the recommendation of the Secretary of Finance, to temporarily revert the tax to 12 percent to ensure fiscal discipline.

This would occur if the Development Budget Coordination Committee (DBCC) projects that the national deficit will exceed programmed targets for any given fiscal year.

Previously, Tulfo proposed for a one-month tax holiday, intended to provide direct relief to Filipinos amid concerns over corruption in several government projects.

“Reducing the VAT does not just benefit specific sectors; it covers everyone—regardless of income bracket. Filipinos deserve better, so we should give them more,” the senator said.