The recent announcement of a 15% increase in VAT and the removal of exemptions is going to hit all Filipinos really hard.
It will also erase any economic gains made by ALL previous administrations and take the Philippines into Venezuelan territory.
Instead of letting the market determine the most efficient use of capital, the Philippine state has declared that is the all knowing repository on what is best for customers of infrastructure, health, and education.
We have already seen how this will play out in previous regimes – and yet this current regime thinks it will achieve new results from the same inefficient tax and spend policies.
Here’s a fearless forecast on what’s gonna happen:
- Overpriced and delayed infrastructure projects awarded to cronies
- A reduction in consumer spending due to less disposable income
- A reduction in the quality of life
Hard nosed observers of realpolitik note that the legitimacy of any regime is based on economic well-being. People are often times willing to give up their liberties in exchange for economic security. However, when new taxes are imposed, people are being killed in wild abandon – something’s gotta give. It’s not going to be a question of IF but a matter of when.