On the proposed NRA, VAT and income tax cut, travel tax abolition
ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star
February 19, 2026 | 12:00am
Last Tuesday, Feb. 17, I attended the Pandesal Forum on the topic, “Taxes: What reforms do Filipinos actually need? Who really pays?” The three speakers were Mon Abrea, chief tax advisor of Asian Consulting Group (ACG), Cielo Magno-Gatmaytan, professor at the UP School of Economics (UPSE) and former Department of Finance undersecretary, and Ann Cuisia, founder and CEO of TraXion Tech and former IT consultant at the Office of the President. Kamuning Bakery owner Wilson Flores was the moderator.
All three speakers are my friends. I met Mon in several tax fora more than a decade ago when I was still a “militant” tax cut and spending cut advocate. Cielo is a fellow alumna of UPSE and Ann is fellow member of the Concerned Doctors and Citizens of the Philippines (CDC PH), the only strong organized group that fought lockdown dictatorship and mandatory vaccination in 2020-2022.
I will enumerate the five main advocacies of the three speakers and my comments with them.
1. Abolish the travel tax. Yes. This is taxation based on envy and fatten some useless bureaucracies. Filipinos should travel abroad more, widen their perspectives, befriend people abroad and in the process, encourage them to visit the Philippines too. The Philippines is the only country in the ASEAN, perhaps in all of East Asia, that imposes a travel tax, shameful.
2. Reduce VAT from 12 percent to 10 percent. Yes. Ann is considering eight percent, I support it too provided that all VAT exemptions are removed except raw agriculture, fishery and meat (kangkong, tilapia, chicken,…), carinderia food, and personal imported items for Filipinos arriving home. Main reason is the difficulty of implementation, the cost of enforcing it is much larger than the potential revenues. Also anti-poor to tax those kangkong and kamote.
3. Increase income tax exemption thresholds. Yes. Mon is proposing a P1 million annual personal income to be exempted from income tax. That is a realistic figure. The current P250,000 annual personal income exemption under the TRAIN Law of 2017 translates to only P19,200/month, small at current prices.
4. Adopt the OECD Global Minimum Tax of 15 percent for multinationals. Yes. Mon said the Philippines may have foregone over P50 billion annually by not implementing top-up taxes on large multinational enterprises.
5. Establish a National Revenue Authority (NRA). The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) will be abolished, merged and integrated into the NRA, a government-owned and controlled corporation (GOCC).
Yes, I agree. Salaries of personnel in GOCCs like LBP, DBP, SSS, GSIS are exempted from the government salary standardization, higher than standard rates. Same officials of BIR and BOC may possibly assume leadership of the NRA. Cielo added that the idea of NRA has been floated since 2001 or 25 years ago, it is not a new idea but never took off, it must be taken up today.
Other tax issues that came up during the open forum and my comments on them.
6. Abolition of all exemptions from VAT except few items mentioned above. I raised this during the open forum and Mon quickly agreed. I specifically mentioned exemptions from VAT by purchases of senior citizens, persons with disability (PWD), and sales of renewable energy (RE).
The rule of law means that the law applies equally to unequal people and sectors, no one is exempted and no one can grant an exemption. So a VAT law should apply to all except a few items. Medicines, RE, private schools and universities, private hospitals, purchases by senior citizens and PWDs, others should be slapped with VAT at lower rate. Their exemption means huge tax leakage. Moves to exempt electricity, medicines, water from VAT are wrong and parochial.
7. Digital tax and blockchain. Ann said that every peso transaction should be traceable from contract to receipt. Require all government suppliers to issue e-invoices that match purchase orders and payments, and publish contract-to-payment data for public audit. Use digital identity to reduce leakages in social transfers. I agree with her.
8. Targeted tax audit, risk-based and not arbitrary. Mon and Ann mentioned this, that focus and enforcement should be on the largest risk clusters, where data mismatches are highest, not on compliant SMEs. I agree with them.
9. Higher sin tax especially tobacco products. Cielo quickly supported this arguing that smoking incidence is rising again so tobacco, vape tax should rise. I disagree with her. The main reason why smoking incidence is rising again is because smokers shifted from legal to illegal, smuggled tobacco which are very cheap as taxes on legal tobacco keeps rising.
See the numbers: tax rate in 2021 was P50/pack, tobacco tax collection was P176.5 billion; P55/pack in 2022 and revenues declined to P160.3 billion; P60/pack in 2023 and revenues further declined to P134.9 billion; P63/pack in 2024 and revenues even declined to P134.4 billion.
This trend is similar to our VAT rate of 12 percent, the highest in the ASEAN and we have the lowest collection efficiency of only 35 to 40 percent. Vietnam and Singapore have only eight percent VAT/GST and they have 70 to 71 percent collection efficiency.
Also similar to our income collections: 83 percent of total personal income tax revenues come from compensation earners or the average employees and personnel, 12.5 percent from single proprietorships, 4.3 percent from professionals.
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