House opposes VAT increase, claims working class will suffer

The Plenary Hall, House of Representatives Complex, Constitution Hills, Quezon City
(Photo by Malacañang Photo Bureau/Robert Viñas)

MANILA – The House of Representatives yesterday opposed the Malacañang Palace’ proposal to increase the value-added tax (VAT) and criticized its refusal to cut income taxes.

Several lawmakers instead urged the Aquino administration to ‘show compassion’ towards the middle-class and the poor who would likely suffer the proposed increase from 12 to 14 percent VAT.

“Magpakita naman sila ng malasakit (they should show compassion). It is Malacañang that should see the bigger picture,” Leyte Representative Ferdinand Martin Romualdez said.

“The rich would not mind a two-percentage-point increase in VAT. It is the middle class, employees and the poor who will suffer,” Isabela Representative Rodolfo Albano lll said.

“Increasing VAT to 14 percent will be an added burden to the working class, especially to the poor, which comprises the bigger chunk of society since it will mean corresponding increases in the cost of goods and services,” Pasig Representative Roman Romulo added.

The House instead considered passing bills that would modernize the tax collection system, scrap tax incentives and impose tax on soft drinks.

“I have trust in the Bureau of Internal Revenue (BIR) and Commissioner Kim Henares. They have been improving their collections every year. It is the Bureau of Customs that is wanting in performance, but I know that Commissioner Alberto Lina is doing his best to improve it,” Albano said.

Some lawmakers also asked if there was a need to increase VAT.

“There is clearly something wrong if despite having the highest tax rates in the ASEAN region, the Philippines has one of the lowest tax collection efficiency,” Marikina Representative Miro Quimbo said.

“I think the DOF (Department of Finance) and BIR should really look at the numbers and not just see this as plus and minus thing…  Increasing the VAT will hit even those exempt from income taxes, that makes it a cruel proposal,” Valenzuela City Representative Sherwin Gatchalian said.

The Malacañang, for its part, welcomed improving tax collection instead of changing tax rates.

“According to Commissioner Henares, government is not proposing higher VAT rates. We are for status quo,” Communications Secretary Herminio “Sonny” Coloma Jr. said.

“No change in tax rates, and no new or higher taxes, and also no income tax cuts. Government will just focus on improving collection,” Coloma added.