Economists Warn Scrapping VAT Could Trigger Fiscal and Economic Crisis

• Economists warn that scrapping the 12% value-added tax could trigger a fiscal or economic crisis as VAT collections reached P487 billion in eight months of 2025
• Cavite Representative Francisco Barzaga filed a bill to remove VAT citing its impact on low and middle income households, suggesting wealth taxes and higher excise duties as alternatives
• Tax experts called the proposal reckless and populist, arguing it would lead to economic collapse and fiscal crisis rather than helping consumers
• Some analysts suggest reducing VAT to 10% instead of complete removal, which could save households P7,000 annually while costing government P200 billion
• The Philippines’ 12% VAT rate is higher than most Southeast Asian countries where rates range from 10% to 12%

Source: bworldonline.com

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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