MANILA (AP) — Philippine tax reform advocates demanded sweeping changes Tuesday, including the elimination of the country’s unique travel tax and a reduction of VAT from 12 percent to as low as 8 percent, during a forum hosted by Kamuning Bakery.

Speakers Mon Abrea, chief tax advisor at Asian Consulting Group, Cielo Magno-Gatmaytan, a University of the Philippines School of Economics professor and former finance undersecretary, and Ann Cuisia, founder of TraXion Tech and ex-presidential IT consultant, outlined their proposals before an audience at the Pandesal Forum on Feb. 17. Kamuning Bakery owner Wilson Flores moderated the discussion titled ‘Taxes: What reforms do Filipinos actually need? Who really pays?’

Abrea led with a call to scrap the travel tax entirely. ‘This is taxation based on envy that fattens useless bureaucracies,’ he said, according to participants. The Philippines stands alone in ASEAN — and possibly all of East Asia — with the levy, which experts said discourages outbound travel and inbound tourism.

Cuisia pushed hardest on VAT cuts, eyeing 8 percent if exemptions were stripped away except for raw agriculture, fishery and meat products like kangkong, tilapia and chicken, plus carinderia food and personal imports by returning Filipinos. ‘Implementation costs outweigh revenues, and it’s anti-poor to tax basics,’ she argued. Abrea endorsed a 10 percent rate, while Magno-Gatmaytan supported broader reforms.

Abrea proposed hiking the personal income tax exemption threshold to P1 million annually, up from P250,000 under the 2017 TRAIN Law — equivalent to just P19,200 monthly amid soaring prices. The forum also backed the OECD’s 15 percent global minimum tax for multinationals. Officials estimate the Philippines has lost over P50 billion yearly without top-up taxes on large foreign firms, Abrea said.

The centerpiece: Establish a National Revenue Authority as a government-owned corporation, dissolving the Bureau of Internal Revenue and Bureau of Customs. GOCC staff like those at LandBank, DBP, SSS and GSIS enjoy salary exemptions from standardization, allowing higher pay. ‘Same BIR and BOC leaders could helm it,’ Abrea suggested. Magno-Gatmaytan noted the NRA concept dates to 2001 but has languished for 25 years.

Open forum debates sharpened the ideas. Attendees called for ending all VAT exemptions beyond basics, targeting leaks from seniors, persons with disabilities and renewable energy sales. ‘The rule of law applies equally — slap VAT at lower rates on medicines, power, private schools and hospitals,’ one participant urged. Mon Abrea agreed on the spot.

Cuisia advocated digital tracking via blockchain and e-invoices for every government transaction, from contracts to receipts, with public audits. Digital IDs could cut social transfer leakages, she added. Both Abrea and Cuisia stressed risk-based audits on high-risk clusters with data mismatches, sparing compliant small businesses.

Sin taxes drew fire. Magno-Gatmaytan favored hikes on tobacco and vapes amid rising smoking rates. Critics countered with data: Tax per pack jumped from P50 in 2021, when collections hit P176.5 billion, to P63 in 2024, with revenues plummeting to P134.4 billion. ‘Smugglers thrive as legal prices soar,’ they said. The pattern mirrors VAT — Philippines’ 12 percent rate, ASEAN’s highest, yields just 35-40 percent collection efficiency versus 70 percent in Vietnam and Singapore at 8 percent.

Income tax skews too: 83 percent from wage earners, 12.5 percent from sole proprietors, 4.3 percent from professionals. Higher rates breed noncompliance among lawyers, doctors and consultants, speakers concluded. Three core lessons emerged: Elevated personal income taxes deter non-wage earners; steep VAT erodes efficiency; soaring tobacco levies tank collections.

The proposals land as the Philippines grapples with fiscal shortfalls and low tax take — around 13 percent of GDP versus regional peers. Finance officials have not commented. Forum organizers plan follow-ups with lawmakers.