PCCI supports lifting of 12% VAT on basic commodities

The country’s largest business group is backing a proposed legislation at the House of Representatives to remove the value-added tax (VAT) on basic commodities, which include bread, sugar and cooking oil, saying it will help both consumers and businesses.

Philippine Chamber of Commerce and Industry (PCCI) president George Barcelon told the Inquirer that lifting the 12 percent VAT on these goods would help ease Filipinos’ suffering from the unabated increase in the prices of basic commodities.

“Yes, especially now as food prices and [agriculture] products are going up, the waving of the VAT would lessen the burden on consumers,” Barcelon said when sought for comment if the business community sees the passage of this proposed law as a positive.

Barcelon said the lifting would also help local businesses sell more of their products, as high prices make most people spend less, hence pulling down their revenues.

“With high prices, [businesses] get more resistance from the consumer,” Barcelon added.

The PCCI official said that local businesses would also be able to lower their prices to some degree with its removal, as the VAT factors into the final computation of the cost of a product.

“At least 12 percent from the overall cost can be removed. I think that would be the least price reduction that a seller can do,” he added.

Aside from consumers, Barcelon said he was expecting food-related business, in particular, to benefit from such a move.

The Makabayan bloc in the lower house filed House Bill No. 5504, which seeks to amend the Tax Reform Act of 1997 and include VAT exemptions provisions.

The bill specifies items that will be exempted from VAT, including food items such as bread; canned pork, beef, fish and other marine products; instant noodles; biscuit; sugar (raw and refined) and salt.

Other goods included in the list are cooking oil, laundry soap, detergents, firewood, charcoal, candles and drugs classified as essential by the Department of Health.

Representative Arlene Brosas of the Gabriela Women’s Party said that removing this specific tax on these products would help consumers, especially at a time of rising inflation rate, which stood at a four-year high of 6.9 percent in September.

“Removing the 12 percent VAT on basic goods consumed by poor families on a regular basis will dramatically ease their economic suffering amid skyrocketing prices, massive joblessness and depressed wages,” said the lawmaker.