Gabriela Party-list Representative Sarah Elago has filed a measure seeking to remove the Value Added Tax (VAT) on petroleum products and suspend corporate income tax (CIT) cuts, arguing that the government should not burden consumers amid the ongoing oil crisis.
House Bill (HB) 4774, also known as the Presyo Ibaba Bill, proposes amendments to the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the Tax Reform Act to lower taxes on fuel, electricity, water, and basic food items.
“According to Think Tank IBON Foundation, oil revenue losses can be offset by suspending Corporation Income Tax cuts under the Corporate and Tax Incentives for Enterprises Act (CREATE),” Elago said.
Under the CREATE law, CIT was reduced from 25% to 20% beginning in 2021, with the Duterte administration arguing that the tax relief would allow companies to expand and generate more jobs.
However, Elago noted that the government lost ₱115.8 billion in tax revenue in the first year of implementation and ₱101.8 billion in 2022, figures close to the annual revenue of ₱147.9 billion.
Given the current energy crisis, Elago urged that CIT cuts be suspended alongside VAT on petroleum products to ease the impact of Middle East tensions on Filipino consumers.
“VAT, an indirect and passable tax, corners poor end-users who are not in a position to further pass the tax. It is an ‘end of the line’ tax. VAT is a tax on the poor, and government certainly has many other options,” she said.
The lawmaker also proposed removing VAT on essential goods such as bread, canned pork and beef, fish and marine products, instant noodles, biscuits, sugar, cooking oil, iodized salt, laundry soap, charcoal, firewood, candles, and medicines.
“Removing VAT on electricity, water, toll fees, certain food and other necessities would provide relief to a large number of consumers, and stimulate economic activity especially as more Filipino has slid down to the rank of the poor and unemployed,” Elago added.