Nationwide Anti-VAT Protest Set on Feb. 16
How big is the
opposition to the increase in the value-added tax (VAT)? The answer will
be known on Feb. 16.
BY ALEXANDER MARTIN REMOLLINO
Bulatlat
Just how big is the
opposition to the increase in the value-added tax (VAT)?
The answer will be
known on Feb. 16 when a national day of protest against the VAT hike
happens.
Aside from
cause-oriented groups like the Bagong Alyansang Makabayan (Bayan or New
Patriotic Alliance) and the Kilusang Magbubukid ng Pilipinas (KMP or
Philippine Peasant Movement), the People’s Congress for Authentic
Democracy (PCAD) and the Bangon Pilipinas (Philippines Arise) National
Renewal Movement have committed to join the Feb. 16 anti-VAT hike protest.
|
Gabriela member "blinded" by VAT
increase |
Speaking in a Bayan-organized
press conference last Feb. 11, House Minority Floor Leader Francis
Escudero (1st district, Sorsogon) also said that a number of
legislators from the opposition parties will be taking part in the action.
The campaign against
a VAT increase appears to enjoy wide public support. The results of IBON
Foundation’s Dec. 2004 survey showed 74.11 percent of the respondents
opposed to a VAT increase.
It may be recalled
that the increase in the VAT rate from the present 10 percent to 12
percent is one of eight revenue measures pushed by President Gloria
Macapagal-Arroyo.
People’s burden
Among those covered
by the VAT are food products (processed meat, canned fish, coconut and
vegetable oil, bakery products, noodles, milk, dairy products, coffee,
sugar); clothing, footwear, tannery and leather products; drugs and
medicine, furniture, pulp and paper; glass and glass products; cement,
steel, iron, wood and most construction materials; electrical lamps and
equipment; machinery and equipment both for manufacturing and agriculture;
wholesale trade and retail trade; pawnshops; restaurants, cafes and other
eating and drinking places; employment and recruitment agencies; motion
picture production; hotels and motels; and telecommunications (including
landline, post-paid and pre-paid mobile phone services.)
The Koalisyon sa
Agrikultura Kontra sa VAT (Kontra VAT or Coalition in Agriculture Against
the VAT), a newly-formed alliance of peasant and fisherfolk groups and
livestock and poultry owners and operators, estimates that a VAT hike will
result in an increase in the prices of rice from P20 ($0.36, based on an
exchange rate P54.77 per U.S. dollar) to P24 ($0.44) a kilo, and of
galunggong (a local fish variety) from P100 ($1.83) to P120 ($2.19) a
kilo.
A
recent IBON study showed that the average daily cost of living for a
family of six – the average Filipino family – amounts to P492.19. IBON
used data from the National Statistics Office (NSO) for its study.
Conversely, the daily minimum wage amounts to only P202.59 on the average
nationwide - P289.60 short of the
national average for the daily cost of living for a family of six – based
on data from the National Wages and Productivity Commission (NWPC).
Both IBON and the
American Chamber of Commerce of the Philippines (AmCham Philippines) have
come out with studies predicting that a VAT hike would adversely affect
poor Filipinos.
Press Secretary
Ignacio Bunye said in a statement Feb. 6 that President Gloria Macapagal
Arroyo is for providing “safety nets to minimize the impact of the (VAT
hike) bill on the poorest sectors of our society.”
But Bangon Pilipinas
Deputy Director-General Rolando Cucio told Bulatlat in an interview
Feb. 9 that Bunye’s claim is unbelievable. “If government was unable to
provide safety nets for the present VAT rate, how can it do so when the
VAT rate increases?” he said.
Fiscal crisis
Meanwhile, the
Alliance of Concerned Citizens Opposed to Unjust New Taxes (ACCOUNT) said
in a statement: “Proposals for the exemption of socially sensitive
products from the VAT hike are sweeteners to a basically oppressive tax
measure. They are meant to merely evade the issue of the unjustness of the
VAT hike as a response to the country’s fiscal woes.”
In an interview more
than a week earlier, the nationalist economist Dr. Alejandro Lichauco had
told Bulatlat that the fiscal crisis, which the government seeks to
remedy by pushing for the VAT hike and other revenue measures, is an
offshoot of the country’s entry into the World Trade Organization (WTO) in
1995. Macapagal-Arroyo, then a senator, had spearheaded it a year before
by pushing for the ratification of the General Agreement on Tariffs and
Trade (GATT).
A recent statement by
Rep. Prospero Pichay (1st District of Surigao del Sur) appears
to corroborate Lichauco’s observation.
“For better or for
worse, as a member of the WTO, the Philippines has committed itself to
progressively lower tariff rates and a consequent dwindling of its tariff
duties collections,” Pichay said. “If we are to have enough revenue
collections for our development needs, this simply means we have to make
up for this drop with new taxes.”
Lichauco is calling
for the abolition of the VAT, as well as the exit of the Philippines from
the WTO.
At the press
conference, economist Jimmy Regalario of PCAD said, “The problem of the
fiscal crisis (lies in the government’s inability) to say no to agencies
dictating to it, like the Washington Consensus and the IMF-WB
(International Monetary Fund-World Bank).”
He added that the VAT
hike was being pushed by Malacañang as a means to raise funds for debt
servicing. “That should not be a problem of the people, but it is the
people who are being made to sacrifice,” he said.
Alternatives
Bangon Pilipinas
leader Eddie Villanueva, an evangelist who ran for president in the May
election, has issued a statement calling for a debt moratorium, the
scrapping of tax exemptions for large corporations, and improvements in
the country’s tax collection system as alternatives to a VAT increase.
Villanueva is a former professor of economics and finance at the
Polytechnic
University of the Philippines.
Villanueva’s
recommendations are similar to the views expressed in the ACCOUNT
statement distributed during the Feb. 11 press conference.
“So long as
government continues to borrow at an ever-escalating pace in order to
dutifully pay even onerous debts regardless of the bad state of the
economy, so long as government reduces tariffs for imported goods in
compliance with pro-globalization policies, so long as corruption remains
rampant and systemic starting with the highest levels of governance, and
so long as the entire economy is in a state of backwardness, there will
always be a financial crisis,” ACCOUNT said. “New taxes only postpone, but
not remedy, this inevitability.”
Villanueva and
ACCOUNT find common cause with a number of middle-class people interviewed
by Bulatlat on the VAT hike issue.
“The VAT increase is
an added burden to the people,” said Alfred Magistrado, Jr., a Bicol-based
college student, in a text message sent to Bulatlat. “Government
should think of other means of raising funds.”
Robs Quiambao, a
student of the University of the Philippines (UP) in Diliman, Quezon City;
and Jol Ong, a copywriter working in Makati
City – both have suggestions on how
else the government can raise funds. Quiambao bats for less debt servicing
and improved tax collection, while Ong is for the eradication of
corruption.
Ong said that without
corruption, “we may be able to weather even two fiscal crises.”
Rep. Eduardo Zialcita
(1st District of Parañaque City) stressed last year that the
country could generate an additional P200 billion ($3.65 billion) through
a renegotiation of the country’s foreign debt.
Government losses
Former Finance
Secretary Juanita Amatong revealed that the government lost P229.1 billion
($4.18 billion) in potential revenues in 2003 alone due to tax exemptions
for large corporations. IBON estimates revenue losses from tariff
reduction at P100 billion ($1.83 billion) a year.
A 2004 study by the
United Nations Development Programme (UNDP) placed the yearly revenue
losses from corruption at 13 percent of the national budget. However, the
National Tax Research Center (NTRC) estimates annual corruption losses at
20-30 percent.
Meanwhile, yearly
losses due to tax leakages ranged from P215 billion ($3.92 billion) to
P285 billion ($5.20 billion). Bulatlat
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