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Finding the Right VAT Rate

Value-added tax (VAT) for many is considered to be the best form of
general indirect consumption tax. VAT is an indirect tax, in that the
tax is collected from a person or entity that does not bear the entire
cost of the tax. It is levied on the added value that results from each
exchange in the process of delivering a final product to the consumer.
To avoid double taxation on final consumption, exports (which by
definition, are consumed abroad) are usually not subject to VAT and VAT
charged under such circumstances is usually refundable. It differs from a sales tax because a sales tax is levied on the total value of the exchange. For this reason, a VAT is neutral with respect to the number of passages that there are between the producer and the final consumer.

Whether the VAT is the best way to respond to a shortage of revenue is widely debated. In the Philippines, serious questions about sufficient collection, administration, applicability, and impacts, especially on the poor, have all fueled a myriad of views on the subject. To add to this, serious reservations of tax policies in general arise through criticisms about the lack of integrity within the government. Recent tax reforms in the past few years, including exigency measures of expanding the VAT base to include petroleum and other energy products as well as selected services (EVAT) and increasing the VAT rate from 10 percent to 12 percent (RVAT) have been especially controversial given recent increases in the prices of certain commodities.

Biofuels: Clean Fuels for the Poor?


The global concern with regard to climate change, due in large part to the greenhouse gas emissions resulting from the use of fossil fuels particularly for transport, has spurred many countries to try to develop alternatives that have diminished negative environmental impacts. One course of action that has taken on much recent significance has been the rapid development of fuels from plants, commonly referred to as “biofuels.” In the Philippines, this innovation in alternative fuels is directed towards replacing imported petroleum fuel, which is seen as largely benefiting motor vehicle owners and
transport operators, in addition to claimed environmental benefits. However, the impacts of these fuels on groups at the base of the socio-economic pyramid, particularly small farmers and agricultural workers, are unclear. It is the goal of this study to examine such effects, determine the ways that this development of alternative fuels is affecting the welfare of such groups, and determining possible points of policy intervention so that socio-economic benefits are broadly diffused using a value chain analysis.

Global Collective Action

Leaders of developed and developing countries all recognize the need for collective action to tame the worldwide recession.

But collective action is easier said than done. Protectionism is tempting as jobs and incomes at home are vanishing.

Topnotch economists, including Federal Reserve chair Ben Bernanke and Barry Eichengreen (University of California, Berkeley), say that mercantilist policies during times of world recession did work. See for example Bernanke’s Essays on the Great Depression (2000) and Eichengreen’s Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (1992).

Fiscal Stimulus and Global Collective Action

Let’s face it: The Barack Obama stimulus plan by itself will not lift
the US from the recession in the quickest and most decisive manner.

Some quarters—Paul Krugman, for example—have doubts about the
effectiveness of the stimulus plan. Krugman criticizes the stimulus
plan for lacking boldness as well as for being incomplete and

But let us assume that the Obama administration will take heed of
Krugman’s advice and adopt his more aggressive proposals. Will that
lead to the definitive stimulus?

Market failure in family-size choice

The current global economic crisis which exercises policy makers
everywhere is an example of a market failure which justifies costly
state intervention because doing nothing is much more costly. The
safety-net problem facing our own policy makers today is the more
burdensome because of our failure in the past to deal with another
market failure, one associated with family-size choice among poor
households. And this brings us to a momentous crossroad: the
Reproductive Health (RH) Bill.