According to Statista, global inflation this year exceeded 7.4%. It is more than the 6.3% rate brought on by the 2008 financial market meltdown and is at its highest rate since 1996. While the pandemic caused the rate to decrease by about 3.23%, other reasons like supply chain problems, unstable economic conditions, rising commodity costs, and the conflict between Russia and Ukraine have also contributed to the recent increase.

Expectedly, the Philippines, whose economy was severely damaged by the pandemic, is indeed not exempted. In September, inflation reached a four-year high of 6.9% - above the central bank's full-year target of 2-4% and 6.7% expectation in a Reuters poll. As a result, Filipino consumers are experiencing pressure even if the Bangko Sentral ng Pilipinas (BSP) was striving to lower the percentage. Moreover, it leads us to a question, how will this crisis that affects Philippine taxation becomes an issue that relates to the discipline of accounting?

Briefly, the state imposes the taxation concept to raise revenue from the populace. The rate varies according to the taxable items. It can either be constant or graded; it changes according to the amount. There are many types of taxes, but all of these must be paid in cash. During a period of high inflation, it is evident that currency loses some of its buying value since the value of money cannot keep up with the rising costs of commodities, and more money is required to purchase particular items. Due to this circumstance, a significant volume of currency with lower value moves in the economy, creating a false impression that the amount of taxable income has increased.

Taxation ignores the notion of money's intrinsic worth and instead concentrates on its nominal form. Because of a false increase in income, people were forced into a higher tax category, resulting in more outstanding tax obligations and a decrease in the value of tax credits. This is sometimes referred to as "bracket creep," because it places an unreasonable burden on taxpayers since it causes consumer expenditure to rise while tax obligations unfairly increase.

However, the current legislation like Republic Act 11534, popularly known as the "Corporate Recovery or Tax Incentives for Enterprises Act" (Create), which offered temporary tax exemptions and lowered some tax percentages, is still available to taxpayers until the year 2023.