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

IMF Working Papers, January 1, 2005

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

Revenue decline: public sector revenue has declined markedly over the past seven years (no numeric magnitude provided on the page).
Efficiency: most proposed measures (excise, VAT, electricity rate increases) would raise revenue in a relatively efficient manner.
Distributional impact: using household-level expenditure data, most measures would be progressive, particularly when they prevent cuts in pro-poor spending.

Increased excise rates.
Increased VAT rates.
Increased electricity rates.
Consideration of interactions with pro-poor public spending to preserve progressivity.

Equity: household-level expenditure analysis indicates most proposed revenue measures are progressive.
Efficiency: the measures considered are characterized as relatively efficient revenue-raising options.
Policy trade-off emphasized: maintaining pro-poor spending enhances the progressive impact of revenue measures.

1. Philippines Revenue Trends, 1997–2003
- 1. Philippines Revenue Trends, 1997–2003 (Markdown version)
- 1. Philippines Revenue Trends, 1997–2003 (PDF)