The politics of tax reforms in the Philippines

Date of Publication


Document Type

Master's Thesis

Degree Name

Master of Arts in Development Policy


College of Liberal Arts


Political Science

Thesis Adviser

Eric Vincent C. Batalla

Defense Panel Chair

Francisco A. Magno

Defense Panel Member

Sherwin E. Ona
Maria Divina Gracia Z. Roldan
Cheryll Ruth R. Soriano
Jazmin B. Llana


Taxation and tax reforms have been primarily used as policy instruments to achieve a set of economic and fiscal goals. Economic literature shows that they have been mostly studied using technical aspects or from the point of view of economics. However, recent developments in the landscape of taxation and tax reforms have geared towards the importance of studying tax reforms using politics as a lens.

The call to examine tax reforms using politics as a lens was underscored by economists and political scientists alike. They argue that evidence on the politics of taxation in developing countries remains scarce and that many contributions to the debate lack a deeper understanding of the political processes behind taxation. Lastly, they emphasize that in order to understand taxation and identify strategies to change its characteristics political factors have to be considered.

In the Philippines, there were economists who have said that while economics has usually provided the rationale for reform, politics has often shaped the outcomes while a political scientist once said that the examination of tax policies is a good way of seeing the policy making process of a country in action. Taxation touches almost every aspect of the economy and society and taxation is the area of public policy where the most interests are at stake. It is for these reasons that this study draws its inspiration: using politics as a lens and tax reforms as the subject.

The country is witness to efforts to reform taxes. In fact, it is motivating to determine why tax reforms succeed in terms of its enactment as a law and why some fail, languish and remain as a proposal for years. Thus, this study examined the major tax reforms that were initiated and enacted as a law in different administrations. The successful tax reforms in terms of their passage include the following: 1) the 1997 Comprehensive Tax Reform Program (Ramos Administration) 2) Reformed Value Added Tax or RVAT Law (Arroyo Administration) and 3) Sin Tax Law (Aquino Administration). The Rationalization of Fiscal Incentives (RFI) measure is included in the study in order to provide a complete picture of how politics works and influences policy outcomes as this proposal was introduced and deliberated almost every administration but was never enacted into law as of this writing.

The study used Kingdons Multiple Streams Framework (MSF) to determine the political factors that influence the passage and substance of tax reforms.

Using Kingdons model, the study reveals that economic conditions and the need to raise revenues for the projects of the government provide the rationale for tax reforms while political factors, such as presidential leadership, bureaucratic cooperation, executive-legislative relations, and business lobby influence shape the outcomes of tax reforms.

From among the political factors, it is presidential leadership that greatly determines the success or failure of tax reforms while a fully cooperative bureaucracy, having different mandates and responsibilities, increases the possibilities of achieving the success of tax reforms.

The influence of executive-legislative relations, as manifested in the independence and power exercised by the legislature over the executive, is greatest in shaping the substance of tax reforms. It has been found out that legislatures exercising independence and power over the executive usually result to a compromise version of the tax reform measure. It is in this version that the interests of the executive, legislative, business, and other stakeholders were fused into a piece of tax reform legislation.

Business lobby influence is greatest when presidential leadership is weak and bureaucratic cooperation is limited thus allowing it to exert its strength in hindering the passage of tax reforms. In cases when there is strong presidential leadership and a unified bureaucracy, business lobby manages to exert their influence on the substance of tax reform measures, through different mechanisms and strategies, by ensuring that their interests or goals would be partially, if not, fully contained in the final version of the tax reform law.

Finally, given the patterns established in every successful tax reform, a prognosis was applied to the Tax Reform for Acceleration and Inclusion or TRAIN measured being proposed by the Duterte Administration.

With the presence of moderate to strong level of leadership exemplified by President Duterte and full cooperation among government agencies, the TRAIN has high possibility of enactment into a piece of legislation.

In terms of the substance of the TRAIN, experiences from the other successful tax reform measures show that when legislatures exert independence and power over the executive, the end result is usually a compromise version. It is anticipated that the Senate and the HOR, including the executive, will reach a consensus despite having remarkable differences in their versions. However, the compromise version is anticipated to yield a revenue that is not too far from the estimated revenue that the DOF originally proposed.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

1 computer disc ; 4 3/4 in.


Taxation--Philippines; Taxation--Law and legislation--Philippines

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