Proposed VAT on Digital Goods a Bad Idea, Says Former Solon

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Imposing a 12% value-added tax (VAT) on digital goods of online services providers and streamed entertainment content such as Netflix, Spotify, Shopee, Lazada and more is an anti-consumer, according to former Bayan Muna Party-list Representative Carlos Zarate.

“This proposal is definitely anti-consumer and must be opposed, junked and buried,” he said in a statement.

Zarate, who is known for authoring bills like increasing the minimum salaries of government employees, strengthening the people’s right of information, and increasing the monthly social pension of senior citizens, emphasized that this proposal will just lead to higher subscription fees, service charges, and even prices of online products.

“This proposed tax is another measure that hits the poor and middle class more than the rich and big corporations,” the former lawmaker added.

Instead, the politician suggested that the government should rather tax the rich and big corporations and collect uncollected taxes.

“If the government really wants to increase its coffers, it should embark on a progressive tax system that taxes directly the rich and big corporations more rather than the poor,” Zarate stressed.

The former senior deputy minority leader gave the wealth tax as an example, where a 1% charge can be imposed on every million that an individual, family or corporation earns.

He also added that the government should “vigorously go after” the Philippine Offshore Gaming Operators (POGOs) and have them pay their billions worth of accrued taxes.

“It is tragically ironic that the government wants to tax the poor more but it rushed the passage of the CREATE (Corporate Recovery and Tax Incentives for Enterprises) that would lower the income tax rate of corporations and the rich and will result to an estimated P259-billion revenue loss for the government until 2022,” Zarate concluded.

About last week, Department of Finance (DOF) Secretary Benjamin Diokno in a press conference hinted at adding taxation on digital services, stating that it is fair to tax digital transactions like how physical transactions are taxed.

A report was then published by the Bangko Sentral ng Pilipinas (BSP), stating that the share of digital payments to total retail payments volume in the country rose to 30.3% in 2021 from 20.1% in 2020, while the value of digital payments represented 44.1 % in 2021, up from the 26.8 percent recorded a year earlier.

This article is published on BitPinas: Proposed Vat on Digital Goods a Bad Idea, Says Former Solon

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Nath Cajuday

BitPinas is the oldest blockchain and cryptocurrency news outlet that covers the Philippine blockchain and crypto scene. We are also writing general and international blockchain topics that are relevant to our audience.