Leviste’s fix for corruption: Move flood control funds to schools, cut VAT, tax the rich

MANILA, Philippines — Neophyte lawmaker Rep. Leandro Leviste (Batangas, 1st District) has set his sights on major fiscal reforms — from realigning flood control funds to education to taxing the rich.

In light of billions in taxpayer funds poured into unfinished or substandard flood control projects, Leviste said in a September 1 ANC interview that the government must reform its taxation system to keep funds from being lost to potential corruption.

Calling it a “progressive tax reform,” Leviste suggested cutting the value-added tax (VAT) on goods and services to 10% to give Filipinos more disposable income.

He pointed out how Filipinos pay the highest VAT in Southeast Asia, with 12% of a family’s expenses funneled to the government. For Leviste, this form of taxation is regressive simply because “it is predominantly paid by the poor.”

Instead of paying P120 in tax on groceries worth P1,000, Filipinos could keep an extra P20 to spend on other needs, Leviste said, adding that such a change would “stimulate consumption and increase GDP growth.” 

He projects a P5,000 increase in disposable income for every Filipino family should the VAT be slashed to 10%.

Slash VAT to 10%

While reducing the VAT would mean lower government revenues, he said some funds are better left in the hands of Filipino families than spent on cash aid or flood control projects tied to anomalous deals.

“Instead of the money going to a wealthy person or a contractor, it goes directly into the pockets of a person who will spend that money in the economy,” Leviste said. 

To augment the estimated P130 billion revenue loss, he explained that lowering the VAT should be coupled with a land-based wealth tax of P300,000 per square meter. 

This, he said, is one way to help narrow the gap between rich and poor. By giving lower- and middle-income families more money for basic needs, tax reforms could help prevent wealth from concentrating at the top or flowing out of the country.

“‘Yung iba nga po kasi they’re accumulating wealth. They’re spending it abroad. But kung nasa bulsa ng consumer, then umiikot na lang sa economy, and ‘yan ang magpapaunlad sa ating bansa,” Leviste added.  

(Some are accumulating wealth. They’re spending it abroad. But if it’s in the pockets of consumers, it will circulate within the economy, and that’s what will help our country grow.)

Impose wealth tax 

Apart from cutting the budget of agencies like the Department of Public Works and Highways (DPWH), Leviste said a wealth tax would help curb corruption both at its source and in how funds are later used.

“So lower spending is a good idea if you want to prevent corruption. But the other solution, I think, is to increase a tax on wealthy people because then you’re not only preventing corruption at the source, you’re preventing it downstream on where it is used,” he said. 

The lawmaker, a businessman and billionaire at 32, explained how a wealth tax could work. He said that if profits are funneled into high-end properties with undisclosed sources of income, a land-based wealth tax would prevent assets from being concealed through real estate.

“Then if there’s, for example, 5,000 families that own property worth over P2 billion, that’s a P10 trillion asset class,” Leviste said. 

“And if you impose a 1.5% tax on that, then you can generate P150 billion in revenues, then you can pay for the reduction of VAT,” he added.  

Leviste said that while probing and seeking justice for corruption is necessary and important, it would be “easier” to also adopt a more progressive tax code that allows profits from potential corrupt acts to be taxed and returned to the government.

Isn’t he a billionaire, too? 

The Batangas lawmaker, who amassed over P34 billion in assets after divesting his stake in SP New Energy Corp., said in the interview that he also plans to “give the money away,” mainly to fund scholarships for underprivileged students in the provinces.

Leviste, who is the son of Sen. Loren Legarda, bought 10% worth of ABS-CBN's outstanding shares through his investment firm LL Holdings Inc. (LLH) in June 2024.

This has made him the largest shareholder of ABS-CBN after Lopez Inc. 

Leviste was also the lawmaker who reported an alleged bribe attempt by Batangas 1st District engineer Abelardo Calalo, who supposedly offered him money to stop the probe into the province’s infrastructure projects.

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