IF Malacanang won’t scrap Value Added Tax, it should consider lowering it by half, a lawmaker said yesterday.

Batangas Rep. Hermilando Mandanas, an ally of President Benigno Aquino, proposed that VAT be reduced to 6 percent from the present 12 percent, especially on power and fuel products.

Mandanas, chairman of the House Committee on Ways and Means, filed HB 3850 which seeks to reduce the direct tax payment of consumers from a VAT rate of 12 percent to a lower Value Simplified Tax (VAST) rate of 6 percent.

He urged the President to include in the next Legislative Executive Development Advisory Council (LEDAC) meeting the VAST bill.

“Not only will direct tax payments of Filipinos be reduced, but revenues of the government will be increased by no less than P50 billion and corruption will be drastically reduced with the repeal of input tax credit deductions of the VAT system,” Mandanas said.

Aquino earlier said his administration is not inclined to reduce or remove VAT since doing so would cut government revenues needed to fund vital programs.

Mandanas said the primary feature of the VAST is the removal of the Input Tax Credit System, which provides occasions for graft and corruption, thereby eroding the revenue collection of the government.

“The VAST will reduce graft and corruption which was perpetuated by the complicated system and paperwork under the Input Tax Credit System, which is vulnerable to corruption with the use of fake or re-cycled receipts, repeated tax credit claims, or the understatement of sales, and is exacerbated by weak, inefficient and ineffective  monitoring and auditing,” he added.

The solon said the bill will generate incremental revenue of not less than P50 billion with both the private sector and the end-consumer sharing the burden of paying the tax.