This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. V, No. 7, March 20-26, 2005
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 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. 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 © 2004 Bulatlat
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