A measure to reduce the value-added tax (VAT) on goods and services from 12% to 10% has been filed in the House of Representatives, with the goal of providing relief to Filipino consumers facing rising prices. Batangas First District Representative Leandro Leviste introduced House Bill 4302, or the proposed VAT Reduction Act of 2025, citing that current VAT collections have far exceeded earlier projections.
Based on data from the Department of Finance (DOF) and the Bureau of Customs (BOC), VAT revenues ballooned from P156.67 billion in 2005, when the rate was first raised to 12%, to P1.20 trillion in 2024. Leviste argued that the government can afford the P200 billion revenue loss from his proposal, saying the bill is intended to “give ordinary Filipinos a break.”
“The VAT is regressive, hitting the poor and middle class the hardest. Lowering it makes our tax system more progressive,” Leviste said during a House ways and means panel hearing.
Safeguards for Fiscal Stability
Under the proposal, the President may temporarily restore the VAT rate to 12% if government deficit targets are breached, based on the recommendation of the DOF and the Development Budget Coordination Committee (DBCC).
Finance Undersecretary Karlo Adriano confirmed that the DOF is open to reviewing the measure. “As mentioned by our Secretary (Ralph Recto), we’re willing to take a look at this proposal,” Adriano said.
New Amnesty Program for Taxpayers
Alongside the VAT discussions, the DOF also announced a new tax amnesty program covering unpaid internal revenue taxes from 2007 to 2024. Assistant Secretary Nina Asuncion said the amnesty would include income, withholding, capital gains, donor’s, excise, and documentary stamp taxes. For the BOC, it would apply to VAT and excise taxes on importations, whether assessed or not.
Eligible taxpayers would benefit from penalty immunity, confidentiality of disclosures, and exemption from BIR audits for the covered years. Asuncion noted that the initiative revives a broader provision previously vetoed in 2019, which left only estate tax amnesty in effect.
“This is an opportunity for taxpayers to start fresh while contributing to fiscal recovery,” the DOF said.
