January Reaction Paper

 Teves proposal

To arrest the widening budget gap, former Finance Secretary Margarito B. Teves had proposed to the Aquino administration to raise the VAT, a consumption tax, gradually to 15% from 12%.

Initial estimates from the Department of Finance (DoF) showed the increase in VAT would generate an ultimate windfall of about P73.92 billion yearly if VAT rate is increased gradually to 15% in the next 5 years.

The increased revenues are expected to be realized even if the corporate income tax of 30% is reduced to 25%.

Other fiscal measures being considered include the rationalization of fiscal incentives and raising the excise tax on sin products like cigarette and alcohol. (http://www.abs-cbnnews.com/business/01/21/11/purisima-open-vat-increase-income-tax-cut)


In this second paragraph of the article the former finance secretary proposed to the Aquino administration to raise the VAT from 12% and gradually increase to 15% and if that would be allowed by the government or the administration, then those people experiencing poverty and low income earned would find themselves everything so expensive even for basic commodities would be expensive like the canned goods, milk, beverages in grocery stores and many more.

Fortunately the Department of Finance predicted that if the increase of VAT is pushed through, then it would cause a dramatic downfall of about 73.92 billion yearly if the VAT rate is increased gradually, of course I'm glad the Aquino Administration did not push through this proposal and Estimation of the Department of Finance that the VAT rate to be increased gradually until 15% was turned down, instead it would be added to those sin products like wine, cigarette and other alcoholic drinks.