Scrapping VAT Risks Inflation, Revenue Shortfall, Warns Economist; Urges Caution on Tax Reform

• Abolishing the 12% VAT in the Philippines could strain public finances and trigger inflation, warns PIDS economist Dr. John Paolo Rivera.
• VAT is a major, efficient revenue source, funding about a quarter of government income; replacing it with taxes on luxury goods, digital platforms, and wealth would leave a significant gap.
• The country lacks the systems needed to effectively enforce wealth and luxury taxes, risking public resource shortfalls and reduced funding for essential services.
• Rivera stresses that tax reform must be paired with transparent, accountable government spending to restore public trust.
• Scrapping VAT at the wrong time could worsen inflation and undermine efforts to stimulate economic growth through lower interest rates.

Source: bnc.ph

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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