In a move aimed at easing the financial burden on ordinary Filipinos, Rep. Francisco A. Barzaga of Dasmariñas City has introduced House Bill No. 5119, formally titled the “VAT Abolition Act of 2025.”

The proposed legislation seeks to reduce the current 12% Value-Added Tax (VAT) on goods, services, and imports to zero, effectively eliminating the tax. According to the explanatory note accompanying the bill, VAT has been widely criticized for its regressive nature, disproportionately affecting low- and middle-income families, especially amid rising inflation and cost of living.

“VAT places the greatest burden on ordinary consumers regardless of their ability to pay,” the bill’s explanatory note states. “This measure seeks to relieve the tax burden on Filipino consumers and enhance their purchasing power.”

To offset the revenue loss from abolishing VAT, the bill outlines several alternative revenue sources. These include:

• Excise Taxes: Increased and rationalized levies on non-essential and luxury goods, such as automobiles, alcohol, tobacco, sweetened beverages, and gambling activities.

• Digital Taxes: Imposition of taxes on e-commerce, online streaming, digital advertising, and other online platforms operated by both domestic and foreign entities.

• Wealth and Property Taxes: Progressive taxation for ultra-high-net-worth individuals and enhanced real property tax administration.

• Environmental Taxes: Carbon, plastic, and other green-related taxes targeting industries that contribute to pollution and greenhouse gas emissions.

• Corporate Income Tax Reforms: Closing loopholes, preventing profit-shifting, and strengthening enforcement to ensure compliance.

The bill mandates that the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR), in coordination with other government agencies, develop rules and regulations for implementation within six months of its effectivity.

If enacted, the law would take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.

Rep. Barzaga emphasized that the measure aligns with the state’s policy to adopt a progressive tax system that promotes equity, ensures sustainable revenue, and prioritizes social justice.