By JUDE C. GALFORD III
Senate Minority Leader Aquilino "Nene" Q. Pimentel Jr. (PDP-Laban) yesterday said the administration’s proposal for raising the Value-Added Tax (VAT) from 10 to 12 percent has become more difficult to accept in light of President Gloria Macapagal Arroyo’s latest pronouncement that the government’s financial condition is now in a better shape.
Pimentel said the President’s claim that the fiscal position is "stable" made in her address before the 112th Inter-Parliamentary Union General Assembly at the Philippine International Convention Center in Pasay City has only served to buttress the stand taken by the majority of the senators in favor of retaining the present 10 percent VAT on goods and services and of lifting the VAT exemption of big, profitable corporations and several types of business transactions.
However, he said the President was actually contradicting herself on the issue since just weeks ago, she painted a bleak scenario of the Philippines going the way of Argentina — with foreign debt becoming unmanageable and the peso plummeting steeply — if a higher, expanded VAT is not imposed.
"She is again caught in a web of contradiction with her statement before a foreign audience which was the opposite of what she had been telling her own countrymen, and this only erodes her credibility," Pimentel said.
The opposition senator said the President’s attempt to window-dress the government’s fiscal woes was made in the same breadth that Press Secretary Ignacio Bunye gave the hyperbolic assurance that the country’s
R3.8-trillion public debt is "manageable" despite its hemorrhaging effects on the national treasury.
He said he could not see how the government could justify a 20 percent hike in VAT, which would create a chain reaction on prices of goods and services, when the people are reeling from the harsh effects of soaring oil prices, when workers are not getting any pay increase due to company cost-cutting measures, and when employees are being laid off due to slow business.
"Times are hard and the ordinary Filipino families are finding it increasingly difficult to make both ends meet. But the implementation of the higher VAT would aggravate their miserable condition. The people are angry and running out of patience. And I’m afraid that this highly unpopular tax measure, once implemented, would provoke a social unrest which the government may not be able to control," Pimentel said.
The Senate minority leader maintained that the more pragmatic approach is to intensify the collection of the existing VAT and to plug the loopholes in the tax system in the light of a finding of Finance authorities that
R144 billon in VAT was uncollected in 2003 alone.
He said if this is coupled with the removal of the VAT exemption of many profitable business enterprises, the incremental revenues that could be generated would probably be bigger than the projected tax yield from the additional two percentage point hike in VAT.
Pimentel said that while he is pushing for the scrapping of VAT exemption of Independent Power Producers and telecommunication firms, and shipping and airline companies, they should not be allowed to pass on the additional costs to the consumers.
He said a "no-pass on" provision should be prescribed to make sure that the IPPs and telecom firms should entirely absorb the VAT which they could very well afford given their ever-increasing corporate profits.
Although IPPs are supposed to enjoy tax exemptions under their contracts with the National Power Corporation, Pimentel said such privilege can be revoked by Congress by law to protect public interest.
