Senate TWENTIETH CONGRESS OF THE ) Office of the Rectretace REPUBLIC OF THE PHILIPPINES ) OCT -9 P3:38 First Regular Session SENATE RECEIVED BY: S. No. 1450 Introduced by Senator Robinhood Padilla AN ACT ABOLISHING THE IMPOSITION OF VALUE-ADDED TAX (VAT), AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED EXPLANATORY NOTE The Value-Added Tax (VAT) system was introduced to provide a broad-based and efficient mechanism for revenue collection. However, over the decades, it has increasingly become a regressive tax burden that largely affects low- and middle- income Filipinos. The twelve percent (12%) VAT inflates the prices of basic commodities, utilities, fuel and essential services, thus, aggravating inflationary pressures and destroying the purchasing power of Filipinos. For millions of poor and marginalized Filipinos, the VAT represents a daily economic burden that directly affects their capacity to meet basic needs of their families. The poor effectively contribute to the government revenues through indirect taxation, despite having little to no disposable income. This inequitable situation undermines the constitutional mandate for the state to promote a more just and humane society, where economic policies are directed toward reducing the social and economic inequalities. This bill entitled "Bawas Buwis, Ginhawa para sa Pilipino Act"aims at abolishing the VAT system to pave the way for a simpler, fairer and more equitable tax structure. Alternative revenue sources such as selective excise taxes, digital economy levies,
windfall profit taxes, and progressive income-based systems can sustain fiscal adequacy without penalizing consumption. This measure will bring substantial tax relief to Filipino families, increase their household income, and give them greater purchasing power to meet everyday needs and improve their quality of life. In view of the foregoing, the passage of this bill is earnestly sought. ROBINHOOD PADILLA Senator
Senate Office of the fortretary TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES OCT -9 P3:38 First Regular Session ) SENATE RECEIVED BY: S. No. 1450 Introduced by Senator Robinhood Padilla AN ACT ABOLISHING THE IMPOSITION OF VALUE-ADDED TAX (VAT), AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:
SECTION 1. Short Title. - This Act shall be known as the "Bawas Buwis,
2 Ginhawa para sa Pilipino Act."
SEC. 2. Declaration of Policy. - It is the policy of the State to adopt a fair,
4 simple, and equitable tax system that promotes consumer welfare, enhances business 5 competitiveness, and ensures efficient revenue collection without unduly burdening 6 ordinary citizens. The State shall abolish regressive tax systems such as the Value- 7 Added Tax (VAT) and institute alternative mechanisms consistent with social justice 8 and economic sustainability.
SEC. 3. Abolition of the Value-Added Tax System. - The following provisions of
the National Internal Revenue Code of 1997, as amended, pertaining to the imposition, administration, and collection of the Value-Added Tax are hereby repealed: a. Title IV, Sections 105 to 114 pertaining to VAT on goods and services; b. Title V, Section 116 pertaining to tax on persons exempt from VAT; and c. All other related provisions inconsistent with this Act.
SEC. 4. Implementing Rules and Regulations. - The Department of Finance
2 (DOF), in consultation with the Bureau of Internal Revenue (BIR) shall promulgate 3 rules and regulations necessary for the implementation of this Act within six (6) months from its effectivity.
SEC. 5. Separability Clause. - If any provision of this Act shall be held
6 unconstitutional or invalid, the other provisions not otherwise affected shall remain in 7 full force and effect.
SEC. 6. Repealing Clause. - Any law, presidential decree or issuance, executive
9 order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly.
SEC. 7. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
13 publication in the Official Gazette or in at least two (2) newspapers of general 14 circulation. Approved,