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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.

CARP: Re-distributing Poverty?

Congress is once more contemplating the extension of the Comprehensive
Agrarian Reform Program last extended in 1998. The proposed extension ranges from five to ten years and the proposed appropriation for Land Acquisition and Distribution (LAD) is between P100b and P150b. The
proposed yearly appropriation from the General Appropriations Act runs between P3b and P5b annually. On the provision of credit which is of
crucial importance in our view, one proposal is for a fund of P10b to guarantee loans to beneficiaries; another is for collateral-free loans
(presumably provided or guaranteed by the government); yet another
proposes “mandating financial institutions to accept as collateral for
loans the purchase orders, marketing agreements or expected harvests….”
One thing is sure: the extension will cost the taxpayer a lot of money.
Thus far, the nation has shelled out P160b for land acquisition and
distribution alone. What is not clear is what society got in return?

Did CARP make a difference in the economic welfare of agrarian reform beneficiaries (ARB)?The evidence here is very tenuous:

Acceptance Speech by Dr. Sylvia Estrada-Claudio

Acceptance Speech by Sylvia Estrada-Claudio, MD, PhD for the Bayi Citation for the lifetime promotion and defense women’s and people’s rights, and vigilance for genuine democracy (April 30, 2009). Dr. Estrada-Claudio is a fellow of Action for Economic Reforms.

I am deeply grateful to the Barangay-Bayan Governance Consortium (BBGC)
and the Institute of Politics and Governance (IPG) for this citation. I also wish to thank the Friedrich Ebert Stiftung and One World Action for their support of the BBGC and the IPG in this and other endeavors.

It was difficult to think about and write my acceptance speech. I do not know how to say that I think my award is less about me and more about the people I work with, while at the same time say that I am honored to be a member of a select group of Bayi awardees whose individual achievements are impressive. I am feeling deeply validated and at the same time, feeling like a fraud for getting an award when I was simply doing my duty and having fun while I was at it.

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.

Financial Markets – Where to now?

The bail-out is a temporary relief to a disorder and malaise brought about by a century of unprecedented economic growth along side growing errors and unrestrained character flaws.

Unless we know the root causes that brought about this disorder, we would be like a doctor providing aspirin to a patient with a severe fever and headache.