Senator Bam Aquino filed Senate Bill No. 2047 on Thursday, seeking to reduce the country’s value-added tax (VAT) from 12 percent to 10 percent to mitigate the economic impact of the ongoing Middle East fuel crisis.
Filed on April 16, 2026, the proposed measure aims to amend Sections 106 (A), 107 (A), and 108 (A) of the National Internal Revenue Code of 1997. The bill targets a direct reduction in the cost of basic commodities, utilities, transport, and petroleum products.
Aquino emphasized that the prolonged crisis, driven by geopolitical conflicts such as the US-Israel war on Iran, has severely impacted the middle class. According to the Department of Energy, the volatility in petroleum prices could persist for six months to a year.
“While this crisis drags on, it is not just the poor that has been affected, but the middle class as well, which includes our citizens who have a livelihood but do not receive direct aid from the government,” Aquino stated in Filipino.
Economic Relief and Revenue Balance
The explanatory note of the bill outlines that lowering the broad-based consumption tax will increase disposable income, thereby sustaining household spending, protecting jobs, and stimulating economic activity.
However, Aquino acknowledged the need to balance revenue generation with the immediate welfare of Filipino families. He called for improved tax administration and collection to reduce leakages and ensure proper fund utilization, preventing public funds from being wasted.
Previous Senate Proposals
The filing of SB 2047 follows similar VAT reduction proposals previously introduced in the Senate. These include Senate Bill No. 1552 filed by Senator Erwin Tulfo in November 2025, and Senate Bill No. 1916 filed by Senator Mark Villar in February 2026.
Proponents of these measures have noted that the Philippines’ current 12 percent VAT rate is among the highest in the Southeast Asian region, comparing it to neighboring countries like Indonesia, Vietnam, and Singapore, which maintain equivalent taxes ranging from 9 percent to 11 percent.
Disclosure: AI has been used to help develop this story.
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