VAT Reduction Bill: Tulfo Files Measure to Cut VAT from 12% to 10%
Senator Erwin Tulfo has filed a bill proposing to reduce the value-added tax rate from 12% to 10% in the Philippines. The proposed change aims to ease the burden of high prices on everyday Filipinos amid persistent inflation. Lawmakers and analysts are now debating whether this measure can help boost household spending. This discussion focuses on how cutting the VAT reduction bill could impact consumers, businesses, and government revenue.
What the VAT Reduction Bill Proposes
Senate Bill No. 1552, known as the “VAT Reduction Act of 2025,” seeks to trim the current 12% rate to 10%. The idea is to increase the purchasing power of households and stimulate consumption. Under the bill, the government would allow a temporary return to 12% if fiscal conditions demand it. This safeguard is included to protect national finances and avoid sudden revenue disruptions.
Why Tulfo Filed the Proposal
Senator Tulfo says many Filipino families are struggling with the rising cost of goods and services. By lowering the VAT, he believes people will have more money left for basic needs. He also argues that the Philippines and Indonesia — both with a 12% VAT — have the highest rates in Southeast Asia. Cutting the rate could make the country more competitive with neighbors like Vietnam and Laos, which have lower VAT levels.
Support and Opposition in Congress
Some lawmakers support the VAT reduction because it could help fight inflation on the ground. Others are cautious, saying lower VAT could reduce government revenue and harm public services. Critics point out that key revenue still depends on taxes like VAT. National planners have also raised concerns that cutting VAT across the board might put pressure on the budget if not managed carefully.
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How It Might Affect Everyday Filipinos
If approved, consumers might see lower end-prices on many goods and services. This could ease the financial pressure for low- and middle-income households. More disposable income might help boost spending in local markets and small businesses. However, some economists caution that businesses might not always pass the savings on to customers, and benefits may vary by industry.
What Comes Next in the Lawmaking Process
The Senate must now discuss, review, and vote on the bill in committee sessions and plenary debates. Stakeholders from the business sector, finance officials, and consumer groups are expected to weigh in. The Department of Finance will likely provide projections and recommendations. The future of the VAT reduction bill depends on whether lawmakers can balance tax relief with fiscal stability.
The VAT reduction bill championed by Senator Erwin Tulfo reflects growing calls for tax reforms to ease the cost of living in the Philippines. While many see the proposal as a way to give ordinary Filipinos more spending power, others remain cautious about the long-term effects on government revenues and public services. As discussions continue, the national debate highlights the complex relationship between taxation, inflation, and economic competitiveness. Whether the bill becomes law will shape how Filipinos experience daily prices for years to come.