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People buy from a rice retailerl at the Pasig public Market in Pasig City on January 16, 2025. Jonathan Cellona, ABS-CBN News

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Rice

Daniza Fernandez

ABS-CBN News

MANILA — The government should consider lowering the value-added tax (VAT) from 12 percent to 10 percent to cushion the impact of the rising prices of commodities, an economist said ahead of President Ferdinand Marcos Jr.’s fifth State of the Nation Address on Monday.University of the Philippines (UP) School of Economics Associate Professor and former Finance Undersecretary Cielo Magno said proposals to reduce the VAT will be challenging given the country’s current fiscal space.“I think the government should also start looking at possibilities of reducing VAT from 12 percent to 10 percent so that we can manage the impact of inflation on the goods that we are regularly consuming,” Magno told ANC’s Dateline Philippines.“I know that this will be challenging also to the government because as I have mentioned, we have very, very narrow fiscal space. So, the government has to be very, very strategic in terms of reforming our tax system,” Magno added.The country’s inflation rate was at 6.4 percent in <a href="https://www.abs-cbn.com/news/business/2026/7/7/inflation-eases-to-6-4-percent-in-june-as-fuel-prices-decline-0914" rel="noopener noreferrer" target="_blank">June</a>.The economist also called on the government to review an income tax exemption for those earning P500,000 to P1 million yearly “to improve the quality of lives of Filipinos.”Currently, individuals earning P250,000 and below yearly are exempted from paying income tax.“If we are not secured in terms of standard of living, we will not be productive. How do we do that and why do we need to do that? Because despite the fact that we keep on paying taxes to government, we keep on getting substandard services,&quot; Magno said.&quot;So, I think we deserve to get some reimbursement from government of the taxes we paid because government’s unable to deliver the basic services that we need from government,” Magno explained.<div>‘RATIONALIZE’ THE AYUDA SYSTEM</div>Meanwhile, De La Salle University (DLSU) Political Science and Development Studies Professor Francisco Magno called for the rationalization of the “ayuda” or assistance distribution system.The DLSU professor said the country’s social registry should be strengthened to rationalize the “ayuda” system.“A weak social registry system, it can also be used for corruption, which means you need a strong database, a data system, and a better exchange of data among the agencies. We need an integrated data system and of course, with due respect to privacy protocols,” he said.For the former Finance undersecretary, the government should also boost its institutions aside from its “ayuda.”“We have to fix institutions and systems in terms of addressing Filipinos’ vulnerabilities and that’s strengthening 4Ps (Pantawid Pamilyang Pilipino Program), strengthening PhilHealth (Philippine Health Insurance Corporation), the ones that are institutionalized not just programs that will continuously give doleout to Filipinos, programs that have no concrete plans of making sure we exit poverty kasi hindi kailangan na mag-create tayo ng dependency ng mga Pilipino sa gobyerno,” she said.Recently, Marcos said the government would distribute a new cash assistance of P2,000 to low-income Filipinos amid anticipated fuel price increases due to the war in the Middle East.

The government should consider lowering the VAT from 12 percent to 10 percent as prices of commodities rise, an economist said.

The government should consider lowering the VAT from 12 percent to 10 percent as prices of commodities rise, an economist said.

Gov’t should consider lowering VAT to 10 pct amid inflation — economist

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Gov’t should consider lowering VAT to 10 pct amid inflation — economist

Daniza Fernandez,

ABS-CBN News

Published July 27, 2026 04:00 PM PHT

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taxes

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inflation

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