VAT Hike: Views from Down and the Middle

Bulatlat interviewed a garment worker and a university instructor to find out how the VAT affects them at present. They both stand to be adversely affected by a VAT rate hike, even as they have different views on whether it is right for the government to increase the VAT rate.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

George W. Bush behind rope-bound Christ/Juan de la Cruz and the thorn-crowned Filipino Everywoman in an anti-VAT increase rally, March 16. Photo by Alexander Martin Remollino

Cherry Reyes, a garment worker in Taguig (a municipality in south Metro Manila), joined the multi-sectoral rally against the increase in the value-added tax (VAT) rate from 10 to 12 percent. And she had good reason to do so, she said.

Reyes is the main breadwinner of a family of four. She computes her take-home pay as amounting to P3,000 ($55.21 based on March 18’s $1:P54.34 exchange rate) a month. She supports her mother and her newborn baby.

Her husband, an electrician, occasionally gets to bring money into the house, but that’s only very occasionally. He gets requests for his services only three times a month on the average, she says. He charges P500 for every service rendered or an average of P1,500 every month.

The couple’s combined income is P4,500 a month. “It’s never enough for the family,” she told Bulatlat. “We always have to borrow money to make both ends meet.”

Like the regular Filipino family, the Reyeses have bread for breakfast and rice for the other meals. Because they are always cash-strapped, they make do with the cheapest food items, such as galunggong (a native fish variety) or vegetables.

For her baby, she buys the cheapest infant milk available.

Mobile phone

Being the only one in the family with a fixed regular income, she is able to use a mobile phone. There is no landline in the small room that the Reyeses rent. Cherry usually resorts to the so-called E-Load system, which is a lot cheaper than the usual pre-paid cards that cost at least P300.

So what does the proposed VAT rate increase, one of the revenue measures being pushed by Malacañang supposedly to pull the country out of the fiscal crisis that hit it last year, have to do with all these?

Presently 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).

They of course fry their galunggong. The cooking oil they use for that is also covered by VAT.

The bread they have for breakfast as well as the milk she buys for her baby are VAT-covered. So is the mobile phone service she avails of.

Everytime they buy something from the grocery, they pay the VAT, since retail trade is VAT-affected.

It is not difficult to imagine how much harder making both ends meet would be for them should VAT rates increase.

Instructor

Lanelyn Carillo, though definitely not rich, is way better off than Reyes. A university instructor in Dasmariñas, Cavite (36 kms south of Manila), she earns P15,000 monthly from her job. Aside from herself, she financially supports her parents, a brother, and an uncle.

Her food expenses total P3,000 a month. “Because of my busy schedule,” she explains, “I just eat my breakfast, lunch and dinner including all the meriendas (snacks) out.”

She sends P2,000 to her family – P1,500 covers their electricity bills, while the rest goes to their food needs.

For her telecommunication needs, she uses a land phone in her apartment for which she is charged P800 a month, and a mobile phone for which she buys a pre-paid card every two months (equivalent to P150 a month).

She rents an apartment for P4,000 a month.

All these expenses leave her with around P1,950 when everything has been paid for.

Besides all these she uses P100 a month for her Internet needs, and pays for two insurance policies the combined cost of which amounts to P1,000 a month.

That leaves her with P850 savings a month.

As things stand, it is already quite difficult for her to save her earnings. Now the restaurant services she frequently avails of are VAT-affected, and so are many of the food items she buys for herself and her family. Her land and mobile phone services are likewise VAT-covered. Being a university instructor, she has much need for paper, and the VAT covers paper.

An increased VAT rate is sure to make her already meager savings dwindle further.

Despite this, she is still willing to put up with a VAT rate hike, believing that the government needs it.

Reyes does not share her opinion. “The people are already hard up as it is, and the government wants to impose a VAT hike. But where will they put the money?” she asks. Bulatlat

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