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Distributional Implications of the VAT Reform in the Philippines

Author

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  • David Locke Newhouse
  • Ms. Daria V Zakharova

Abstract

This paper assesses the distributional impact of the recent VAT reform in the Philippines and evaluates alternative methods to mitigate the effects of the reform on poor households. The reform was progressive and relatively well targeted. To alleviate the impact of the reform on the poor, several mitigating measures were introduced. Although these measures reduced the adverse impact of the VAT reform for all households, a sizable amount of the benefit accrued to high-income households. Targeted transfer schemes have the potential to deliver a much higher percentage of benefits to the poor.

Suggested Citation

  • 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.
    • Handle: RePEc:imf:imfwpa:2007/153
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    References listed on IDEAS

    as
    1. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
    2. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications - Books, The World Bank Group, number 14902.
    3. Emmanuel Skoufias & Vincenzo Di Maro, 2008. "Conditional Cash Transfers, Adult Work Incentives, and Poverty," Journal of Development Studies, Taylor & Francis Journals, vol. 44(7), pages 935-960.
    4. Mr. Robert Gillingham & David Locke Newhouse & Mr. David Coady & Mr. Kangni R Kpodar & Moataz El-Said & Mr. Paulo A Medas, 2006. "The Magnitude and Distribution of Fuel Subsidies: Evidence from Bolivia, Ghana, Jordan, Mali, and Sri Lanka," IMF Working Papers 2006/247, International Monetary Fund.
    5. 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.
    6. Mr. Kevin Fletcher, 2005. "Increasing Public Sector Revenue in the Philippines: Equity and Efficiency Considerations," IMF Working Papers 2005/022, International Monetary Fund.
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    Cited by:

    1. Nisreen Salti & Jad Chaaban, 2010. "On The Poverty And Equity Implications Of A Rise In The Value Added Tax: A Microeconomic Simulation For Lebanon," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 121-138.
    2. Zhila Abshari & Glenn P. Jenkins & Chun-Yan Kuo & Mostafa Shahee, 2021. "Progressive Taxation versus Progressive Targeted Transfers in the Design of a Sustainable Value Added Tax System," Sustainability, MDPI, vol. 13(20), pages 1-17, October.
    3. World Bank, 2011. "Philippine Health Sector Review," World Bank Publications - Reports 27397, The World Bank Group.

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    Keywords

    WP; VAT; spending; tax; share; price; VAT reform;
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