Philippine Senators Pushing for Farm Inputs Tax Exemption

Solons push for total farm-input VAT exemption.

Philippine House Deputy Majority Leader Juan Edgardo Angara is pushing for the approval of a bill seeking to exempt agricultural inputs from the value-added tax (VAT).

House Bill 123, authored by Angara, seeks to amend the Agricultural and Fisheries Modernization Act (Afma), or Republic Act 8435, to help farmers and consumers.

“The need to exempt from VAT coverage all agricultural inputs cannot be overemphasized,” said Angara.

Angara said agricultural inputs are key ingredients or elements that contribute or make up agricultural products used, traded and consumed by the Philippine economy.

“More taxes imposed on the factors of production in the agricultural sector imply costs for everyone,” Angara said.

Angara’s measure seeks the exemption from VAT of all agricultural inputs as defined in the current Afma. It also aims to expand the definition of agricultural inputs.

Relatedly, Lakas-Kampi-CMD Rep. Edgar Chatto of Bohol, in a separate bill, sought the exemption of all agricultural inputs from VAT.

In filing House Bill 4908, Chatto said that at present, “Only certain agricultural inputs are exempted from the imposition of the VAT.”

As embodied in House Bill 4908, agricultural inputs shall also include fertilizers, insecticides, pesticides, tractors, trailers, trucks, farm implements and machinery harvesters, among others.

Chatto said all agricultural inputs should be exempted from VAT coverage, because these tools “constitute the production of agricultural products utilized, traded and consumed by the Philippine economy.”

“Exempting these vital inputs from the VAT system will result in lower agricultural production costs, giving rise to more farm products with improved quality control for market consumption at reasonable selling prices for the consumers,” Chatto said.

He said, “Because of the limited coverage of the exemption, the farmers are made to pay the burden of the tax by the seller or importer, forcing the farmers to pass on to the consumers the payment of the tax when they sell their products to them, to defray high production costs.”

By Business Mirror

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