The passage of Republic Act No. 12023, or the “Digital VAT Law,” has been met with a mixture of applause and unease. At face value, the legislation appears justifiable—it aims to level the playing field by requiring foreign digital service providers like Netflix, Google, Spotify, and Amazon to pay the same 12% Value-Added Tax (VAT) as their local counterparts. But beneath this façade of fairness lies a troubling ethical dilemma: in a country where digital services have become essential, is this really a tax on corporations—or just another burden quietly passed on to ordinary consumers?
Let’s call a spade a spade. Businesses exist to make profit. When governments introduce new taxes on their operations, these costs are not absorbed out of goodwill—they are passed on to end-users. We’ve already seen price adjustments: Netflix, for example, is set to increase its subscription rates starting June 2025. Other platforms will likely follow. So while the law says it targets big corporations, the Filipino consumer ends up footing the bill.
From an ethical standpoint, this raises serious concerns. The government frames this as a fairness issue, saying that foreign giants should contribute to national development. But why now, and why this way? Instead of improving the lives of citizens through digital access, we are now effectively penalizing them for using platforms that have become integral to education, entertainment, freelance work, and even mental health. In a country with one of the highest digital divide indexes in Southeast Asia, shouldn’t we be lowering barriers to access, not raising them?
Another troubling angle is the timing and context. Filipinos are already dealing with rising inflation, stagnant wages, and poor public digital infrastructure. Yet here comes a law that makes digital access more expensive—ironically in the same period when the government claims to champion digitalization and inclusion. The contradiction is jarring. If the intention is to boost local industries or support the economy, shouldn’t there be accompanying reforms that protect consumers and ensure transparency in how these new tax revenues are used?
There is also the issue of consent and awareness. Many Filipinos were unaware that this bill was even being deliberated, much less passed into law. There was minimal public consultation or education campaign prior to its implementation. That raises another ethical red flag: when a law affects millions of people financially, should it not be introduced with greater transparency and public discourse?
Furthermore, what about digital freelancers and small online entrepreneurs who rely on these platforms for their livelihood? They already operate in a highly competitive and unstable gig economy. If the cost of tools like Google Workspace, Canva, or AI subscription services increases, will they be able to stay afloat—or will they be priced out of their own businesses?
Advocates of the law argue that this is merely aligning our tax system with global standards. That may be true on paper, but in practice, it overlooks the socio-economic realities of the Philippines. A digital tax in a country like Norway or Japan, where wages are high and infrastructure is solid, has a vastly different impact than the same tax applied in a developing country. Ethics isn’t just about fairness on paper—it’s about outcomes in real life.
There’s also the question of accountability. The government now stands to earn billions in additional revenue from this law. But how will these funds be used? Given the Philippine government’s track record of inefficiency and corruption, it’s not unfair to ask: are we just pouring more money into a leaking bucket? Citizens deserve assurance that the money they’re indirectly paying through higher digital prices will be reinvested into better internet infrastructure, digital literacy, and support for MSMEs.
And let’s not forget the psychological aspect. People feel betrayed when leaders say, “It’s not a tax on you,” but then they wake up to higher bills. This erodes public trust and sets a dangerous precedent for future legislation. If this kind of economic sleight of hand becomes normalized, what’s next? A “non-tax” on food? Medicine? Education?
Ethics demands honesty, fairness, and protection of the vulnerable. Unfortunately, RA 12023, in its current form and implementation, seems to fail on all three counts. It may be legal—but that doesn’t necessarily make it right.
In the end, taxation must evolve with the times—but so should our sense of justice. If the government truly wants to usher in a digital future, it must ensure that no one is left behind, priced out, or misled in the process.
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Rafael “Raffy” Gutierrez is a veteran Technology Trainer with over 25 years of experience in networking, systems design, and diverse computer technologies.
