New Taxes will Weigh Heavily on Ordinary Filipinos

President Gloria Macapagal-Arroyo justifies the plan to introduce eight revenue measures with the reasoning that these would earn the government some P80 billion ($1.43 billion) in additional revenues and curb the budget deficit – for this year at least. The plan is colliding with public opinion, and for good reason.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

The Macapagal-Arroyo administration’s plan to introduce eight new revenue measures has met stiff opposition not only from cause-oriented mass organizations, progressive party-list groups, and the mainstream opposition – but also from several legislators in the ruling coalition and the political parties allied with it.

President Gloria Macapagal-Arroyo justifies the plan with the reasoning that the tax measures would earn the government some P80 billion ($1.43 billion) in additional revenues and curb the budget deficit – for this year at least. The plan is colliding with public opinion, and for good reason.

The revenue measures being proposed are:

1. A P2 ($0.0357) across-the-board increase in specific taxes on petroleum products. This will translate to an additional P1.75 ($0.03125) per liter, to be shouldered by drivers as well as the commuting public. This will be a heavy weight on the shoulders of the people, considering that oil prices are presently at a historic high.

2. A two-step increase in the value-added tax (VAT): from 10 percent to 12 percent, and onward to 14 percent. The imposition of the 10-percent VAT on commodities during the Fidel Ramos presidency caused significant price increases. It aggravated the impact of the increases in prices of commodities caused by oil price hikes. The increase of the VAT will bring prices further beyond the reach of the people.

3. The indexation to inflation of the excise taxes on alcohol and tobacco products. This can be passed on to consumers. With this the government estimates that it will earn some P14 billion ($250 million) a year.

4. The rationalization of fees and charges. Among the steps being considered toward this is an increase in fare rates on the Light Rail Transit and the Metro Rail Transit.

5. The institutionalization of a lateral attrition law. Before the ouster of Macapagal-Arroyo’s predecessor, Joseph Estrada, Congress managed to pass a lateral attrition law. Macapagal-Arroyo, however, did not sign it when she took over on the heels of the People Power 2 uprising because of opposition from government employee unionists, who argued that such a law violates the right to security of tenure.

6. The imposition of taxes on text messages. This would mean higher messaging rates for cellphone users. (The government seems to have abandoned this tax proposal in the wake of massive protests from cellphones user under the broad-based TXTPower. Malacañang had denied planning to impose a text tax and said that what it actually aimed to tax was the windfall profits of telecommunications companies.)

7. Shift from net to gross income taxation (GIT) for corporations and business income-earning individuals. For business owners, this would mean a higher income tax.

8. The granting of general tax amnesty with submission of SALs--Statements of Assets and Liabilities.

Resolution

House Resolution No. 91, introduced by Bayan Muna (People First) Reps. Teddy Casiño, Joel Virador, and Satur Ocampo and Anakpawis Reps. Crispin Beltran and Rafael Mariano and co-sponsored by more than 50 other representatives with many coming form administration and pro-administration parties, opposes the eight new tax measures.

The resolution states that “at least three of the (p)resident’s proposals would have a direct impact on the general public because of their pass-on and regressive nature, particularly: 1) the planned P2 across-the-board increase on specific taxes on petroleum products; 2) the two-step increase in the value-added tax (VAT) rate from 10 percent to 14 percent; and 3) the indexation to inflation of excise taxes on cigarettes and liquor.”

It also states that “any new or additional taxes that would directly burden ordinary Filipinos are ill-advised at this time when poverty and unemployment rates are at historically high levels, even as the inflationary impact of these new taxes would surely have a dampening effect on domestic industries and overall economic growth.”

HR 91 calls for an investigation into the causes of the P285-billion ($5.09 billion) yearly losses in government revenues “in the form of tax leakage and foregone or waived collections that have seriously undermined government revenue efforts and its fiscal position since the last decade.” It also recommends remedial measures intending to boost tax collection efforts, including the possibility of reviewing existing tax laws, tariff  reform programs, and investment liberalization policies. Bulatlat

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