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)?

Speaking in a Bayan-organized press conference last Feb. 11, House Minority Floor Leader Francis Escudero (1^st 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 (1^st 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 (1^st 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

 BACK TO TOP ■  PRINTER-FRIENDLY VERSION  ■   COMMENT

© 2004 Bulatlat ■  Alipato Publications

Permission is granted to reprint or redistribute this article, provided its author/s and Bulatlat are properly credited and notified.