Angara pushes for VAT-exemption on agri inputs

In order to protect the interest of farmers and livestock growers, Senator Edgardo J. Angara today highly encourages exemption of vital agricultural inputs from value-added tax (VAT).

"The need to exempt from VAT coverage all agricultural inputs cannot be overemphasized. Agricultural inputs are the key ingredients that contribute or make up agricultural products used, traded and consumed by our economy," said Senator Angara, who chairs the Senate Committee on Agriculture and Food.

He added, "the continuous non-exemption of these vital inputs fosters a circuitous drain on the average farmer and consumer which sadly does not help our plight one bit. More taxes imposed on the factors of production in the agricultural sector imply costs for everyone."

Although the VAT system establishes a wider tax base by making efficient and simplified tax administration, it needs to be more particular in terms of agricultural inputs. As of press time, only certain agricultural inputs are exempted from VAT.

"In effect, this leads the seller or the importer to pass on or shift to the consumers, specifically the farmers and livestock growers, to absorb the tax. This shall further lead to higher overhead costs shall ultimately be burdened by the average Filipino family," said Senator Angara.

To remedy such a scenario, Senator Angara - who authored the Republic Act 8435, otherwise known as the Agriculture and Fisheries Modernization Act (AFMA) - has drafted a bill providing for its revisions.

Passed in 1997, the AFMA provides a comprehensive framework to modernize agriculture and ensure food security in the country.

Under his bill, the exclusive use of all types of imported agriculture and fisheries inputs, equipment and machinery shall exempt an enterprise from payment of tariff and duties.

As an additional incentive for the agriculture sector, the following articles are proposed to be exempted from payment and coverage of E-VAT: fertilizers, insecticide, pesticide, tractor, trailers, trucks, farm implements and machinery, harvesters, threshers, hybrid seeds, genetic materials, sprayers, packaging machinery and materials, bulk-handling facilities such as conveyors and miniloaders, weighing scales, harvesting equipment, spare parts of all agricultural equipment, fishing equipment and parts, refrigeration equipment as well as renewable energy system such as solar panels.

"Productivity of our rural farmers and livestock growers will be greatly improved if we allow VAT-exemption of agricultural inputs, which form the very backbone of the sustainable growth envisioned for our country," he said.