A congressional measure seeking to bring down the country's value-added tax from 12 percent to 10 percent could put roughly ₱9,000 back in the pockets of every Filipino household each year, according to its author, Representative Leandro Legarda Leviste of the House of Representatives.
The measure, formally designated House Bill No. 9915 and titled the "VAT Reduction Act," was officially received by the House's Bills and Index Service on June 23, 2026. If enacted, it would mark the first downward adjustment to the VAT rate since it was raised to 12 percent under the Expanded VAT Law — a rollback Leviste frames as overdue relief for ordinary Filipinos.
What the Bill Would Actually Change
The proposed legislation does not target a single provision but amends three separate sections of the National Internal Revenue Code of 1997. Specifically, it revises Section 106, which covers the sale or exchange of goods and properties; Section 107, which governs the importation of goods; and Section 108, which applies to the sale of services, digital services, and the lease of properties.
All three provisions currently carry a uniform 12 percent VAT rate. Under House Bill 9915, each would be reduced to 10 percent — a two-percentage-point drop applied consistently across the board.
Two Decades of Surging VAT Revenue
The bill's explanatory note, as cited in the measure's text, draws a direct line between the 2005 rate hike and the dramatic growth in government VAT collections. According to the bill, combined collections by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) climbed from ₱156.67 billion in 2005 to ₱1.20 trillion in 2024 — an eightfold increase over roughly two decades.
Cutting the rate back to 10 percent, the bill estimates, would reduce annual VAT collections by more than ₱250 billion. Leviste acknowledged this revenue impact but argued the shortfall could be absorbed by trimming wasteful government expenditures or by imposing additional levies targeted exclusively at the country's wealthiest citizens. He characterized VAT as a regressive tax — one that places a proportionally heavier burden on lower-income households — and contended that reducing it aligns with the constitutional requirement for Congress to promote a progressive system of taxation.
Framed as an Alternative to Bigger Government Spending
Leviste positioned his bill as a direct counterpoint to the national government's planned budget expansion. According to the lawmaker's statement, proposed government spending is set to rise from ₱6.79 trillion in 2026 to ₱7.2 trillion in 2027 — an increase of more than ₱400 billion.
"Instead of increasing spending, we can reduce the VAT by two percent to save ₱250 billion, or ₱9,000 per Filipino family," Leviste said in Filipino, presenting the tax cut as a more direct way to benefit ordinary households compared to expanded public expenditures.
Philippine VAT Among the Steepest in the Region
The bill's explanatory note situates the Philippine rate within a regional context, and the comparison is unflattering for the country. At 12 percent, the Philippines carries one of the highest VAT rates in Southeast Asia. According to the bill, comparable economies maintain significantly lower rates: Indonesia at approximately 11 percent, Cambodia and Vietnam at 10 percent, Singapore's GST at 9 percent, Malaysia at 8 percent, Thailand and Laos at 7 percent, Myanmar at 5 percent, and Timor-Leste at just 2.5 percent.
The bill argues that bringing the Philippine rate in line with regional norms would strengthen the country's economic competitiveness and make it a more attractive environment for investment and commerce.
Research Body Endorsed the Cut in January 2026
The proposal does not lack for institutional backing. The bill cites the Congressional Policy and Budget Research Department (CPBRD), which issued a recommendation in January 2026 stating that lowering the VAT from 12 to 10 percent is advisable and would likely generate positive economic effects. The CPBRD noted that the revenue shortfall from the rate cut could be partially offset by increased household consumption, greater participation in the formal economy, and stronger private-sector investment — outcomes it said would flow naturally from putting more disposable income in consumers' hands.
A Second Attempt After the 2025 Version Stalled
This is not Leviste's first attempt at VAT reform. The lawmaker disclosed that he introduced a similar proposal during the previous Congress in 2025. That version attracted support from the CPBRD but was never scheduled for a vote before the session adjourned.
"I am refiling this proposal, and I am hopeful there are still ways to get it approved," Leviste said in Filipino, signaling his intent to push the measure further this time around.
Implementation Timeline Under the Bill
Should the bill pass both chambers and be signed into law, the Department of Finance — working in coordination with the BIR — would be given 60 calendar days from the law's effectivity date to issue the corresponding implementing rules and regulations. The law itself would take effect 15 days after publication in the Official Gazette or a newspaper of general circulation.
By the Numbers
- 12% to 10%: The proposed VAT rate reduction under House Bill 9915
- ₱156.67 billion: VAT collections in 2005, the year before the rate was raised
- ₱1.20 trillion: VAT collections recorded in 2024
- ₱250 billion+: Estimated annual revenue reduction if the cut is approved
- ₱9,000: Projected annual savings per Filipino household
- ₱6.79 trillion → ₱7.2 trillion: National government spending, 2026 to 2027
- 60 days: Window given to the Department of Finance to issue implementing rules
- January 2026: Month the CPBRD released its recommendation supporting the VAT reduction
Why This Matters
Value-added tax is among the single largest contributors to national government revenue, and any reduction in its rate carries significant fiscal consequences that would ripple across public services and infrastructure funding. For consumers and businesses alike, a two-percentage-point cut would directly lower the cost of goods, services, and imported products — the first such decrease since the rate was elevated to 12 percent. While the CPBRD's analytical endorsement and Leviste's constitutional arguments lend the measure credibility, House Bill 9915 still faces a lengthy legislative journey through committee deliberations and plenary voting before it can take effect.
Source: Originally reported by Manila Bulletin / wire reports