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Increasing Public Sector Revenue in the Philippines: Equity and Efficiency Considerations

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  • Mr. Kevin Fletcher

Abstract

Public sector revenue has declined markedly in the Philippines over the past seven years. Most observers of the Philippine economy agree that rebuilding public sector revenue will be critical to reducing deficits and ensuring public sector debt sustainability. This paper reviews several of the main possibilities for raising public sector revenue, including increases in excise, VAT, and electricity rates. It argues that most of these proposals would raise revenue in a relatively efficient manner. Using household-level expenditure data, it also finds that most of these measures would be progressive, especially if they allow the government to avoid cuts in pro-poor spending.

Suggested Citation

  • Mr. Kevin Fletcher, 2005. "Increasing Public Sector Revenue in the Philippines: Equity and Efficiency Considerations," IMF Working Papers 2005/022, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/022
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=17948
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    References listed on IDEAS

    as
    1. World Bank, 2001. "Philippines : Filipino Report Card on Pro-Poor Services," World Bank Publications - Reports 14022, The World Bank Group.
    2. Devarajan, Shantayanan & Hossain, Shaikh I., 1998. "The combined incidence of taxes and public expenditures in the Philippines," World Development, Elsevier, vol. 26(6), pages 963-977, June.
    3. Kent Matthews & Jean Lloyd-Williams, 2000. "Have VAT rates reached their limit?: an empirical note," Applied Economics Letters, Taylor & Francis Journals, vol. 7(2), pages 111-115.
    4. Zee, Howell H. & Stotsky, Janet G. & Ley, Eduardo, 2002. "Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries," World Development, Elsevier, vol. 30(9), pages 1497-1516, September.
    5. Mr. Benedict J. Clements & Mr. Sanjeev Gupta & Mr. Hong-Sang Jung, 2003. "Real and Distributive Effects of Petroleum Price Liberalization: The Case of Indonesia," IMF Working Papers 2003/204, International Monetary Fund.
    6. Mr. Nigel A Chalk, 2001. "Tax Incentives in The Philippines: A Regional Perspective," IMF Working Papers 2001/181, International Monetary Fund.
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    Cited by:

    1. David Locke Newhouse & Ms. Daria V Zakharova, 2007. "Distributional Implications of the VAT Reform in the Philippines," IMF Working Papers 2007/153, International Monetary Fund.
    2. Emmanuel S. de Dios et al, 2005. "The economy on a cusp : the proposed VAT amendments and their larger significance," UP School of Economics Discussion Papers 200505, University of the Philippines School of Economics.

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    Keywords

    WP; VAT; excise; rate; tax rate; VAT rate;
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