The eyes of the house on May 4 voted to abandon the VAT on fuel amid opposition from the Executive
A Parliamentary representative body is expected to vote on the proposal to remove the value-added tax (VAT) from fuel products, as MPs are trying to get relief from the increase in fuel costs despite the opposition of the government’s economic team.
“Members of Congress are ready to vote to lower the VAT,” said Rep. Batangas Leandro Antonio L. Leviste during the hearing of the Legislative Energy Action and Development Council on Wednesday, added that the chamber has enough support to move forward with the measure.
Mr. Leviste said the lawmakers are willing to bypass the economic team and proceed with the law that will impose a 12% VAT on fuel products.
“Our people can expect Congress to reopen on May 4 when we will vote to remove the value-added tax,” he said.
The proposal, filed under House Bills 4302 and 8838, aims to ease the burden of higher fuel prices on households, transportation workers and other sectors.
Lawmakers who support the move say removing the VAT would provide immediate and tangible relief from targeted subsidies.
The push comes amid growing frustration among lawmakers, who have blamed the executive branch and its economic managers for delaying action on fuel costs.
Mr. Leviste said that continued inaction could erode public trust, adding that Congress must respond to the needs of the Filipino people even amid differing views within the Cabinet.
However, some lawmakers urged caution, citing the need for a clear policy base before proceeding with the vote.
“There will be no vote now… We will wait for the consolidation of all this,” Marikina lawyer Romero Federico “Miro” S. Quimbo told the case in Filipino, referring to the discussions between the committees.
“We will listen to different sectors so that our decision is appropriate and we will not regret it,” he added, stressing that any move should consider long-term results rather than short-term relief.
Mr. Quimbo said negotiations will continue once Congress reconvenes, with a joint committee working to finalize a unified position.
This proposal caused opposition from the economic team and Chief Secretary Ralph G. Recto, who warned against the suspension of VAT because of its impact on government revenue.
The Executive Branch instead supported targeted interventions. President Ferdinand R. Marcos, Jr. on Monday he said he approved the suspension of the excise duty on liquefied petroleum gas and kerosene while the duty on petrol and diesel remained unchanged.
Economic leaders through the Development Budget Coordination Committee (DBCC), said tax cuts across the board such as the removal of VAT tend to benefit high-income families who consume a lot of fuel, while providing less targeted support to vulnerable groups.
Secretary General of Finance Karlo Fermin S. Adriano said the DBCC did not propose to suspend VAT on diesel and gasoline, citing the high financial risk.
He said a full suspension would result in a loss of more than P120 billion in eight months, adding to the existing budget pressure.
Mr. Adriano also noted that VAT differs structurally from excise duties, making it more difficult to set up.
He said the effective VAT rate on fuel has been close to 5% due to tax cuts, and removing it could lead to companies passing on non-refundable VAT costs to consumers, which could dampen the expected price drop.
Amidst these concerns, the House committee has required the DBCC, the Ministry of Finance and the Department of Budget and Management to submit detailed information in support of their positions.
Lawmakers say the requested documents will help clarify the fiscal impact of proposed tax measures, including forward-looking revenue and underlying assumptions, as Congress weighs its next steps on fuel tax policy. – Erika Mae P. Sinaking
