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EVAT to drive the people deeper in poverty

Tongtongan Ti Umili-Cordillera Peoples Alliance

November 2 , 2005

Even months before the implementation of the Expanded Value-Added Tax (E-VAT), the Filipino masses were already plunged in deeper crisis, into worsened poverty.

Currently, around 13.2 million Filipinos are either unemployed or underemployed. This burden has been aggravated with soaring inflation rates coupled with skyrocketing oil prices while the delivery of basic social services remains in a sorry state.

Last year, President Gloria Macapagal-Arroyo (GMA) pushed for an expanded VAT law as one of her eight revenue measures supposedly needed to stave off a fiscal crisis that hit the country. It is estimated to generate P28-30 billion from July to December 2005 and P97-105 billion in 2006.

E-VAT automatically means higher pump prices and electricity bills, higher fares for air and sea transport and higher fees for legal and medical services. The Filipino masses have launched protest actions to spare the lowly consumers from this unjust taxation, but the GMA administration is hell-bent on generating additional revenues at the expense of the people.

Some families are now trying to live by using charcoal instead of Liquefied Petroleum Gas, taking Public Utility Vehicles even if they have private cars, tightening their belts as long as they can. From the middle strata of the Philippine society to the depressed masses, we are already suffering. With the implementation of the E-VAT, we ask, “How much more we can endure this consumers’ tax and the seeping poverty?”

By January 2006, the president may still increase the VAT rate to 12% from the current 10%.

After the Supreme Court ruled in favor of the constitutionality of giving the president the authority to increase the VAT rate, next year will be unimaginably harder. The 20% additional VAT from the original 10% will in every way eat-up the budget of Filipino families.

In the first place, why are Filipino consumers burdened by the E-VAT when some big corporations and businesspersons are guilty of tax evasion? Foregone revenues from VAT leakage have been estimated P144 billion in 2003 alone, and P41.6 billion annually between 1998 and 2002. Meanwhile, corporate income tax evasion has been estimated at P54.1 billion annually, and those by professionals and businessmen at P26.7 billion annually. (National Tax Research Center, 2003). Tariff exemptions due to globalization also account for lost revenues.

Furthermore, a 2004 study by the United Nations Development Program (UNDP) placed the yearly revenue losses from corruption at 13% of the national budget. However, the NTRC estimates annual corruption losses at 20-30%.

It is ironic that the people are now being burdened by this administration when the problems of tax-evasion, tariff losses due to globalization and corruption remain unresolved. With this situation, the E-VAT will only serve as another target of corrupt government officials and a leeway for tax-evaders.

However, despite the anti-VAT sentiment of the public, the GMA administration is hell-bent in pursuing the VAT law through its immediate implementation, primarily because the International Monetary Fund (IMF) recommended the increase in VAT as early as 1999 for the government to be able to pay its loans to international creditors. The E-VAT is clearly an IMF imposition under its Memorandum on Economic and Financial Policies. The IMF wants the country to settle its debts to ensure the collection of international creditors.

With the E-VAT implementation and the continuing economic and political crises, the Filipino people now clamor for immediate relief. But we cannot find the needed respite under the anti-people and anti-poor government of the GMA regime. It is then necessary for the people to act against the E-VAT, alongside with the call for the immediate ouster of the GMA regime.

JUNK E-VAT!
OUST GMA! #

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