Reduction of Sales Tax Bakery Products

December 12, 1979 BIR RULING NO. 112-79 Reduction of sales tax bakery products This refers to your letter to Minister Cesar Virata of the Ministry of Finance dated November 2, 1978 requesting him to recommend to the President of the Philippines for the reduction of the sales tax on bakery products from 10% to 5%. In other words, you would like to place bakery products within the purview of Section 201 of the Tax Code. In reply, I have the honor to inform you that the basic policy consideration underlying Section 201 of the Tax Code is, the Government wants to maintain at low levels the prices of basic commodities by subjecting them to the low rate of 5%. However, in preparing the list of such commodities, the government could not overlook its revenue needs for the purpose of financing nationals development. Inclusion of so many items under the 5% tax rate category would considerably reduce or erode government revenues. If bakery products were to be included in such a list there would be a clamor to include so many products but this would considerably erode government revenues. Under the circumstances, this Office is not inclined to recommend the reduction of the sales tax on bakery products from 10% to 5%.