Flexibility Clause in Specific and Percentage Taxes

Grants the President, with the recommendation of the Secretary of Finance and NEDA, authority to: a. Revise percentage tax rates. b. Change classification of articles listed in Sections 194, 195, 196, 197, 198, 199, and 201. c. Revise taxable base levels in Sections 195 and 197.
Conditions for exercising authority:
1. Redirecting expenditure or consumption patterns for economic development.
2. Changing classifications due to technological and social changes implementing new concepts of essentiality or manufacturing processes.
3. Fluctuations in currency value and inflation or deflation making tax bases or price levels unrealistic.
4. Counteracting adverse foreign actions.
Limitations imposed:
- Percentage tax rates may be increased by up to 50% or decreased by up to 10%.
- Price levels may be adjusted up or down by up to 50%.
Public hearing to be held and interested parties given reasonable opportunity to be heard before submission of recommendations.

To enhance flexibility and responsiveness of the Philippine tax system to rapid economic, social, and political changes.
Enables timely adjustment of tax measures to maintain economic stability and competitiveness.
Introduces procedural safeguards such as public hearings to promote transparency and public participation in tax policymaking.

Presidential power limited by specific percentage caps on tax rate modifications.
Requirement of inter-agency collaboration between the President, Secretary of Finance, and NEDA.
Explicit triggers for exercising flexibility aimed at economic welfare and response to external and internal economic changes.
Balance between executive flexibility and procedural due process through public hearings.