The Department of Finance’s proposal to remove non-basic sector’s exemption from paying Value Added Tax will bring in additional P92 billion in revenues.
Finance Undersecretary Karl Chua told PNA that from the present number of exemptions, at around 143, about 100 will be removed.
”Only the basic necessities like food will be exempted. This is cited in the tax code,” he said.
Some of the sectors that currently enjoy exemptions from paying VAT number to around 59 under the tax code while 84 others were given exemptions under special laws.
These sectors cover agriculture, schools, economic zones, power sector, housing sector, and the micro, small and medium enterprises.
Among those whose exemptions will be removed are the Girl Scout of the Philippines, which have already signified its willingness to be removed from the list, and the large cooperatives.
Chua said cooperatives that fall below the proposed new threshold of P3 million, from the current P1.9 million, will still be exempted from paying VAT.
Senior citizens and persons with disabilities will continue to be exempted from paying VAT.
Chua said gains from the VAT exemption removal would be used to finance the additional infrastructure that the economy needed as well as offset the revenues spent to the bottom 50 percent of the economy who werte affected by the proposed increase in VAT as well as the excise tax on fuel.
Under the Finance department’s proposed Comprehensive Tax Reform Program, the government will extend P300 per month to the 10 million poor households in the country for one year.
Chua said this benefit was unconditional and would be given on top of the cash transfer given to beneficiaries of the Pangtawid Pamilyang Pilipino Program.
He said DOF had studied the effect of higher VAT and those below the 50 percent of the population would not benefit from the proposed income tax reduction since their salaries were below the minimum wage level.
”They are the ones who will be affected by higher excise tax on fuel and the VAT so the P300 will lessen the impact of temporary increase in spending,” he added.