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Gov’t officials admit adverse RVAT impact

Presents strategies to lessen impacts

BAGUIO CITY (Sept. 20) — Government officials admitted today that the expanded value added tax (E-VAT) will have an adverse impact on the people as they presented mitigating strategies to arrest the apprehended increases in prices of goods and services.

Officials of various government agencies lumped together as the Reformed Value Added Tax team (R-VAT Team) were here this week to discuss the salient features of the VAT Reform (R-VAT) law with a multi-disciplinary audience and called for public support, but failed to bring to an end the public’s apprehension over the tax measure.

The RVAT team presented papers from the Departments of Finance, Trade and Industry, Energy and Agriculture, clarifying that there are mitigating measures to be taken by said departments to arrest the impact of the 20% increase in the value added tax.

Atty. Ramil Bugayong, of the Department of Finance clarified that a Republic Act 9337 retains the VAT rate at 10% but increases it to 12% by January 1,2006 if the ratio of VAT collection to the gross domestic product (GDP) exceeds 2.8% of the national government deficit to GDP ratio for 2005 exceeds 1.5%

DTI Undersecretary Zenaida C. Maglaya said that manufactured goods are already subjected to 10% VAT. The DTI, Maglaya said, has been monitoring basic necessities and prime commodities and since noted that there is a slight movement of prices from August this year. She said, this is not yet due to the R-VAT, but due to other factors such as oil price hikes in the world and domestic markets, foreign exchange fluctuation.

Maglaya also clarified that there will be increases on VAT from 10% to 12%, but not 10% increases in prices of basic and prime commodities. She revealed that DTI has been Grafting strategies to reduce the impact of the R-VAT and cited stop-gap measures as special importation and tariff adjustments. She also said that a special packaging technology may reduce the price of basic goods such as canned fish or sardines.

“Kapag nasa pouch na ang sardinas, di na ito kailangang igia. Maari na itong ilublob sa mainit na tubig, tipid pa sa LPG,” (f sardines is packed in pouches, this need not be sauteed, t could be heated by dipping the pouch in hot water. One also saves on LPG) Maglaya told an awestruck crowd. This reduces the price of canned fish from PI 1 to P8, according to Maglaya.

Energy department’s Mrs. Melita Obillo, who presented Usec Melinda L. Ocampo’s paper said that for the first time, petroleum products would be subjected to VAT. She said, however, that taxing petrol would result in savings because government will have to lessen or regulate the use of petroleum-based products, thus a savings on foreign exchange resulting from less oil imports.

As a part of government mitigating measures, R-VAT removed the excise tax on some socially sensitive products as fuel oil, diesel and kerosene, and reduced the excise tax on regular unleaded gasoline. She announced, however that fuel prices will increase by at least 6% when the R-VAT is enforced.

For LPG, Obillo said that the VAT impact is mitigated by the zero-import duty, which used to be 3%.

DA Assistant Secretary Romeo Recide is optimistic that the R_VAT is beneficial to the agriculture and fishery sector, saying the LGU incremental VAT collections are earmarked for agricultural modernization. He said it will yield an almost negligible impact to cost of production and will have a one percent impact to retail cost of basic commodities.

After the presentations, however, representatives of the peasants and the cooperatives sector reacted to the mitigation prescribed by the government.

A peasant leader from the lowlands described the plight of rice farmers who have to contend with high prices of agricultural inputs and low income from sale of farm products. He said that when farmers raised the price of their produce, everybody complained but when the price of inputs increased, no one dared speak.

The farmers, he said, simply needs “sapat na pagkain sa mababang halagang kaya ng magsasaka, sapat na input at energy sa mababang halaga rin” (Enough food at a price farmers can afford, enough input and energy, also at a low price).

Peter Dumaguing of the Cordillera Cooperatives Development Authority asked the government to expand the purchasing power of the cooperative sector to enable members to cope with increasing prices of basic necessities and prime commodities. Dumaguing said he personally monitors prices in the Baguio City market and noted that some fruits and vegetables that used to sell at P15 to P25 per kilo now commands P60 to P70.

Dumaguing also raised the issue of uncollected VAT, which Bugayong placed at 30%. No figure in concrete terms, however, was mentioned.

Bugayong said the increase in prices is not due to R-VAT alone but also due to raise in the price of petroleum products. He said the Bureau of Internal Revenue is doing everything to run after tax-evaders, saying the revenue office rewards anyone who gives information that lead to tax collection.

The DOF representative also admitted that there are serious fiscal problems that could be arrested by generating more revenues for the government such as burden-sharing mechanisms that the end consumers have to bear.

E-VAT went through a rough-sailing in both the House of Representatives and the Senate. A temporary restraining order prevented the government from implementing the VAT Reform Law. # Lyn V. Ramo for NORDIS

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