SEN. Loren Legarda has urged her colleagues to pursue comprehensive tax reform anchored on equity, saying minimum wage earners should not subsidize the lifestyle of the wealthy.
The senator also said tax reforms must bring relief to Filipino families while ensuring accountability in government spending.
She said the revenue foregone from tax cuts can be recovered by addressing corruption, which “drains far more resources than the reforms would cost.” Legarda on Tuesday delivered a privilege speech on three tax reform measures she filed: Senate Bill (SB) 1851, SB 1857 and SB 1963. The bills are designed to lower the cost of food, medicine and electricity for ordinary households.
The senator said that while taxes are the national government’s “lifeblood,” they have turned into an “added burden for minimum wage earners and low-income families.” She said SB 1851, or the proposed Differentiated VAT Rates Act, lowers the value-added tax (VAT) to 10 percent for essential goods and services while retaining the 12-percent VAT on luxury items such as expensive cars, real estate, cigarettes, vapes and alcohol.
Under SB 1851, basic preventive maintenance service for vehicles would drop from a range of P5,000 to P7,000 to a range of P4,910 to P6,875. A mattress priced at P3,000 would fall to P2,946, while a luxury bag worth P350,000 would remain taxed at 12 percent.
SB 1857, or the proposed Murang Bilihin at Serbisyong Medikal Act, removes VAT on basic commodities, medicines and medical services. This includes exemptions for over-the-counter medicines, first aid supplies, canned goods, cooking oil, instant noodles, soap and professional medical services.
For example, paracetamol priced at P50 would drop to P45, bandages from P60 to P54, instant noodles from P750 to P670 per box and cooking oil from P120 to P107 per liter.
SB 1963 seeks to remove VAT on electricity charges such as systems loss and lifeline rate subsidies, which Legarda argued should not be taxed since they are already subsidies borne by consumers.
She noted that inflation recently hit 2.4 percent, driven by a 1.8-percent increase in food and nonalcoholic beverages, further squeezing household budgets.
Legarda said all of these bills were filed under normal circumstances because she believes reductions and exemptions are long overdue.
The senator said these measures would serve as “a bridge toward genuine change and tangible relief at the household level.”