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New killer threatens our people

“Catastrophic,” said BM Rep. Teddy Casiño. “Like a tsunami,” quipped administration Senator Ralph Recto. Opposition Rep. Francis Escudero cried “Beware!”

The young lawmakers, who range the political spectrum from Left to Right, were not referring to another meningo epidemic or Quezon landslide, but to the consolidated version of House Bill 3105, which seeks to remove tax exemptions on certain sectors, and HB 3555 and related bills that seek to increase VAT to at least 12% from the current 10%.

The consolidated tax measure is expected to raise at least P40 billion in additional revenues, but at the same time hurt millions of Filipino consumers.

The measure will push up the prices of staple foods, with pandesal, canned sardines, coffee, milk and sugar topping the list of VAT-able items. Even the “meal of last resort” in an increasing number of Filipino households – instant noodles – is covered by the proposed VAT hike.

Other common household items like toiletries, processed meat and vegetables, vinegar, fish sauce, to medicines, school supplies, plastics, clothing and footwear are also affected.

What’s so despicable is that the proposal sidesteps BIR’s inefficiency in collecting the VAT. According to official records, government lost a total of P393.7 billion or 40% of the total VAT collections from 1998 to 2003. In 2003 alone, P144 billion, or 52% of the expected P279 billion revenues on VAT, remained uncollected.

“Had the government successfully plugged the VAT leakages since 1998, the country could have already paid half its foreign obligations which currently stands at P647 billion,” Rep. Casiño notes.

The Department of Finance had earlier said it would seek 12% hike in the VAT if it fails to meet its 2005 target. This is a clear admission that the public is being penalized for government incompetence and corruption.

Worse, the House leadership appears willing and ready to bend its own rules in order to pass what Rep. Casiño calls the “killer of all tax bills.” Consumer groups representing the most-affected sectors were never given the chance to air their side in the committee hearings. An administration stalwart had admitted that the Lower House waived its rules in deference to Malacañang’s certification that the bill was urgent.

Meanwhile, the Arroyo government is planning to borrow another P7 billion to cover its 2005 budgetary deficit. This, despite the Philippines having achieved the notorious position of having the largest public debt in Asia.

Clearly, the solution to the country’s chronic fiscal crisis is not increased taxes. The solution – or at least one step in that direction – has been standing there right in front of our noses. It is called debt repudiation.

At the very least, the government should review and possibly renegotiate all foreign debts. This is not shooting at the moon. Countries like Peru, Bolivia, Ecuador, Cuba, the Ivory Coast, Nigeria, Tanzania and Zaire, have unilaterally suspended or repudiated part, if not all, of their debts. In fact, as BM Rep. Joel Virador noted, even the US repudiated some of its debts incurred from British financiers in the 19th century.

But at the rate the GMA regime is selling and mortgaging the country to foreign vultures so that it can misspend more public money, the idea of debt repudiation will have to wait for a new government that is more attuned and responsive to the growing public clamor for urgent reforms.

The tiyanak who stole the May 2004 elections continues to deny our people this hope to find our own way out of the crisis.

And that, exactly, is the reason why the political tectonic plates continue to shift under our feet. #

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