BIR misses VAT collection target by P6.37 billion

The Bureau of Internal Revenue (BIR) failed to meet its collection target for value-added tax (VAT) in the first seven months of the year, accumulating P467.04 billion against a goal of P473.41 billion, though this still represents a 9.17% increase from the previous year.

VAT, a 12% tax applied to goods, property, and services, is a significant contributor to government revenue, accounting for approximately 25% of total tax collection.

Discussions around proposals to reduce the VAT rate from the current 12% to 10% have gained traction.

Batangas Rep. Leandro Antonio L. Leviste has filed House Bill No. 4302, the proposed VAT Reduction Act of 2025, aiming to lower the VAT rate.

The House of Representatives' committee on ways and means, led by Chairperson Marikina 2nd District Rep. Miro Quimbo, has expressed support for discussing the VAT reduction proposal.

Quimbo has informed the Department of Finance (DOF) of the urgency of reevaluating the measure, acknowledging the need for a deep evaluation due to VAT's substantial contribution to revenue.

Potential strategies to offset revenue losses from a lower VAT, such as a wealth tax or reduced government spending, have also been mentioned.

While proponents argue a VAT reduction could ease household financial burdens, concerns remain about its potential negative impact on government revenue and debt consolidation efforts.