The Pangasinan Star ONLINE

WINDOWS
Gabriel L. Cardinoza

Until it took effect last Tuesday, I never realized that the impact of the Expanded Value Added Tax Law would be that immediate and sudden. That day, everything practically shifted to a higher plane, especially gas prices, which is now almost P40 a liter.

In the office the following day, everybody was cursing the E-VAT, as if it were a thief in the night that took away their most valuable possessions when they were fast asleep. But the E-VAT is here to stay, and my officemates all agreed they have no choice but to live with it.

According to a Bureau of Internal Revenue flyer, the E-VAT Law (RA 9337) simply removed the VAT exemptions of formerly exempt sectors of the economy, making “the burden of taxation now shared more equitably.”

Unfortunately, these formerly exempt transactions include medical and legal services, petroleum products, generation, transmission and distribution of electricity, among others. This explains why pump prices of oil products are now higher; the 10 percent VAT was passed on to consumers. Expect your November electricity bill to be higher when you receive it next month.

Ibon Foundation, an independent research-education-information development institution, said in a feature article that based on a study conducted by the National Statistical Coordination Board, removing VAT exemptions and zero-rate privileges on petroleum products, power generation, transmission and distribution and medical and legal fees will increase household consumption expenditures by 1.9 percent.

Using data from the 2003 Family Income and Expenditure Survey (FIES) in its computation, the NSCB found that this would increase the average expenditures of the poorest 10 percent of Filipino families by some P40, the poorest 20 percent by P61 and the poorest 30 percent by P77.

“Since these families are already in debt, any additional increase in expenses as a result of the E-VAT will force them to borrow even more.

“The poorest 10 percent of families, for example, would see their monthly debt grow from P155.25 to P195. For a family who may be eking out an uncertain and irregular livelihood in the informal economy, this amount is substantial,” the article said.

The government, however, asserts that with the implementation of the E-VAT (They’re now calling it the R-VAT as the original “expanded” VAT was the one implemented over a decade back – Ed), the ordinary Filipino will have to sacrifice at the start but will reap the rewards in the long run in the form of more jobs and livelihood facilities, better social services, more infrastructure and less debts.

“The additional revenue will address the delivery of basic services, such as building and maintaining public schools, constructing farm-to-market roads, bridges and other infrastructure, maintaining peace and order, improving hospitals and public health services,” the BIR said.
What is disturbing though is the Department of Finance’s pronouncement that it has already earmarked 100 percent of E-VAT proceeds for 2005 towards debt servicing, 70 percent in 2006, 60 percent in 2008, and 50 percent by 2010. And this may be subject to further adjustment due to the delay in E-VAT's implementation.

And with this, what would be left for the delivery of basic services?

Juan dela Cruz had argued, quite logically, we say, that the government did not actually need the E-VAT Law to meet its annual revenue targets. It just needed to improve its tax collection efficiency and eliminate graft and corruption.

ENDNOTES: Local media networks have taken an active role in social services. Last Oct. 29 and 30, ABS-CBN Dagupan conducted a Kapamilya Day and medical-dental mission at CSI The City Mall. Early on, Kapuso’s RGMA, DZSD-Super Radyo did the same at the Dagupan City People’s Astrodome. Last Nov. 5, it was Bombo Radyo’s turn when it conducted Dugong Bombo, a blood-letting activity at the CSI The City Mall, in cooperation with the Philippine National Red Cross.

QUICKQUOTE: Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing. – Abraham Lincoln