Reducing the value-added tax (VAT) to 10 percent from the current 12 percent would erode the government’s fiscal consolidation, with total revenues expected to decline by an average of ₱330 billion annually, or one percent of the country’s economic output.
“From our estimates, the reduction of VAT from 12 percent to 10 percent is around one percent of GDP [gross domestic product], more or less ₱330 billion a year on average,” Finance Undersecretary Karlo Fermin S. Adriano said during the Philippine Tax Academy (PTA) Convention last week.
This would push the deficit to about 6.3 percent of GDP
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