Artists, Health Professionals Unite Against VAT

By implementing the twice-postponed 10 percent Value-Added Tax (VAT) on professionals, the Macapagal-Arroyo government has earned the ire of artists – a powerful sector in this country where popularity could sway public opinion, and make one a president for that matter.

BY ALEXANDER MARTIN REMOLLINO 
Bulatlat.com

Early in January, the Department of Finance announced that it would finally implement the 10 percent value-added tax (VAT) on artists and professionals. The implementation of the VAT for artists and professionals under Section 5 of the Republic Act 8424 or the Tax Reform Act of 1997 had been twice deferred due to opposition from sectors to be affected by the measure.

Once again artists and professionals registered strong opposition to the measure. Actors and actresses, broadcast journalists, and talk show hosts appeared on television one Saturday wearing black to dramatize their protest. Representatives of organizations of artists and professionals held a dialogue with Finance Secretary Isidro Camacho. On the second anniversary of the People Power II uprising that installed the Macapagal-Arroyo government, they held a rally at Mendiola.

Government explanations

Camacho explained that salaried individuals have been putting up with heavier tax burdens compared to those of artists and professionals who earn more. He also accused these sectors of tax evasion.

The finance department also cited falling revenues as bases for implementing the VAT for artists and professionals. The Bureau of Internal Revenue collected P36.31 billion in 2001. The tax revenues for 2001 were P8.71 billion; in 2002 the BIR collected only P8.23 billion worth of tax revenues.

Artists and professionals are not buying these explanations, however.

Health workers speak out

"There are a number of reasons for such dismal performance of the country's main revenue collectors," said the Health Alliance for Democracy (HEAD), an organization of physicians and other health workers and students of the health sciences, in a statement Jan. 20.

Citing a Nov. 26 report from the broadsheet Philippine Star, the health organization said that the Department of Finance itself has admitted that government loses at least P74 billion in revenues yearly due to flaws in tax administration and graft and corruption in its own agencies for revenue collection.

"Until today, the government has yet to settle business tycoon Lucio Tan's P26-billion tax evasion case," the health group said further. "This case has spawned allegations of corruption, not only against executive and legislative branches of government; but even the judiciary as Tan reportedly bribed the government officials to avoid penalties."

It further explained that, "Falling government revenues can also be attributed to government's neoliberal policiy of cutting taxes on a wide range of imported commodities to the detriment of our heavily taxed local industries. In 2001, the Bureau of Customs lost almost $3 billion from its level in 1996 due to various liberalization commitments."

HEAD pointed out that by granting incentives to foreign investors, the government "waived" more than P263 million in potential revenues from 1993 to 2000.

HEAD described the VAT as "inimical to the people's interests" and said that "It only serves IMF-World Bank dictates to decrease the budget deficit and pay the country's foreign debt and to satisfy further the voracious appetite of graft and corruptors."

Unity vs. VAT

Representatives from the health professions, broadcast media, and show business recently formed the Network Opposed to VAT (NO VAT).

The network released a statement signed by influential leaders of the movie and broadcast industry – Joel Lamangan, Jose Javier Reyes, and Carlitos Siguion Reyna of the Philippine Directors Guild Inc. (PDGI), Julie Po of  the Concerned Artists of the Philippines (CAP), Girlie Rodis of the Philippine Association of Managers, Inc. (PAMI), Richard Gomez of the Katipunan ng mga Artista ng Pelikulang Pilipino (KAPP), Mitch Valdes of the Organisasyon ng mga Pilipinong Mang-aawit (OPM) , Celeste Legaspi of Philstage and broadcast journalist Cito Beltran, – as well as by leaders of health professionals, Dr. Jojo Carabeo of HEAD and Dr. Jojo Sabile of the Philippine Medical Association (PMA),

NO VAT cited statistics showing that the country is in crisis: more than half of the population live below the poverty line, 30 percent of children below five years are malnourished, ten percent of the labor force are jobless, and the national government had a budget deficit of P210 billion for 2002.

"We, artists and professionals, are not spared from the adverse effects of the country's economic conditions," the signatories said. "The additional 10% VAT leveled on us will worsen rather than ease the economic crisis that now confronts our country." They further argued that the VAT would ultimately burden the end consumers, those receiving their services, since they would have to charge higher fees in consideration of the added expense. "Moreover," the signatories continued, "it can instill the commercialization of our professions, instead of strengthening its social orientation.

The group called on the government to consider other sources of revenues, such as:

1. less tax exemptions, preferential treatment, tax-free importation, and tax credits to the big local and foreign corporations;

2. more stringent and decisive measures to curb graft and corruption;

3. more caution and selectivity in guaranteeing loans by private interest groups.

NO VAT further urged the government to take steps to maintain the VAT exemptions of artists and professionals and to "immediately enact a law that will permanently exclude artists and other professionals from VAT, as well as review the injustice of the whole VAT system." Bulatlat.com

We want to know what you think of this article.