Senator Erwin Tulfo has filed Senate Bill No. 1552, or the proposed “VAT Reduction Act of 2025,” seeking to lower the value-added tax (VAT) from 12% to 10% to ease inflationary pressures and increase household purchasing power.
“A reduction in VAT is therefore consistent with the Constitution’s mandate to establish a progressive tax system that promotes equity and social justice,” the bill’s explanatory note stated.
Tulfo said lowering VAT would leave more money in people’s pockets, encourage consumer spending, and stimulate economic growth while improving tax collection.
He noted that the Philippines and Indonesia currently impose the highest VAT rates in Southeast Asia at 12%, compared with 7% to 10% in neighboring countries.
“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,” Tulfo said.
The measure includes a safeguard provision allowing the President to temporarily restore the 12% VAT rate if the Development Budget Coordination Committee projects the national deficit will exceed fiscal limits.
Separately, Cavite 4th District Representative Kiko Barzaga filed a bill seeking to scrap VAT entirely, reducing the rate from 12% to zero.