Executive Secretary Ralph Recto on Monday dismissed proposals to reduce the value-added tax (VAT) rate, stressing that the government still needs to borrow more than a trillion pesos even under the current system.
“Considering that we are still borrowing ₱1.6 trillion, that should be a factor in determining whether we should reduce it or not,” Recto told Palace reporters.
“Bahala na kayo how you interpret that,” he added.
Senator Erwin Tulfo earlier suggested lowering VAT back to its original 10% to ease inflationary pressures, but Recto flagged the risks, noting the country’s heavy borrowing.
Recto, who previously served as senator and Finance Secretary, was among those who pushed for raising VAT to 12% from 10%.
He has repeatedly warned that lowering the rate could weaken government finances and trigger a credit ratings downgrade.
The debate comes as the Philippines grapples with slower growth in late 2025, with economic managers already revising targets downward.