The tax policy reform program is part of the priority agenda of the Duterte administration, in line with the commitment to promote positive change to the Filipino people. The tax policy reform program consists of four packages. The Department of Finance (DOF) submitted to Congress the first package of the proposed tax reform, known as the “Tax Reform for Acceleration and Inclusion” (TRAIN) that seeks to lower and restructure personal income taxes while broadening the value-added tax (VAT) base and adjusting excise taxes imposed on petroleum products and automobiles. Expanding the VAT base by removing several exemptions and limiting the exempt list to raw food and other necessities (e.g. education, health) is one of the offsetting tax measures being proposed to cover the loss from the personal income tax cut. This VAT reform proposal will be the subject of this paper.

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