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lovephileo's review
Investment Sector: Commodities Submitted by Lovephileo 
, WEB CONSULTANT / PASTOR
at LIGHT OF THE WORLD CHRISTIAN CENTER
2 months ago Tags: e-vat revenue transport social service Tax Commodities Add Tag |
Has the e-EVAT impoverished or improved the Philippine economy? Has it neglected the government's vital services such as education, health and social services or it benefited the government, the Filipino people?
Republic Act 9337 or the Expanded Value Added Tax Law was one of the economic reforms advanced by the President Gloria Macapagal-Arroyo shortly after she won presidential election in 2004. The law sharply reduced the country's fiscal deficit, making the Philippines attractive to investors once again.
Almost 2 years after the e-VAT came into force in September 2005, the House Committee held the hearing following calls for the government to abolish the VAT, to immediately scrap the 12 percent e-VAT on oil and petroleum products, from some legislators, the transport groups, consumers and religious groups. For now, series of strikes are crippling the transportation in Metropolitan Manila.
A bill at the House, the 12% tax on food, oil, medicine and electricity as prices increase worldwide, the poor have been badly hit. However, the supreme Court, the government and some analysts stated that removing the e-VAT on oil imports will only push the country right at the epicenter of the global economic crisis as it will greatly impair the government's capacity to implement projects and programs that are precisely designed to improve the economy.
IMF studies show the poor are better protected by increasing social spending rather by reducing energy taxes, because the benefits of social spending are better targeted to the poor than those of reducing gasoline taxes. Further, the IMF had warned that lifting the 12% VAT on oil would give investors a negative impressions of the Philippines.
True, removing the 12% tax on basic commodities will be detrimental to Filipinos and will only make the prices of commodities rise even more, the prices of basic commodities will go higher because of the rise in interest rates and the depreciation of the peso. If the peso depreciated to P55 to the dollar, every liter of gasoline and diesel will have increased by P5. Thus, it would certainly hurt the economy and would deprive the government funds for social services.
Maybe, it is very easy to say we should suspend or remove e-VAT, but that would mean less money for government, less money for education and less money for health. I think it is not reasonable to remove it this time, the country is suffering economically, I guess the e-VAT is the only thing that keeps this country afloat now.
During the first quarter of the year, the P4 billion revenue from VAT was spent on social services. P2 billion for power subsidy for lifeline consumers paying for 100 kilowatt hours monthly or less; P1 billion for scholarships and training vouchers and P1 billion for the conversion of diesel engines to CNG (Compresed National Gas) and LPG engines. The P8 billion worth of subsidies, dubbed as "fruits of e-VAT" which have been distributed to the poor since January this year. These dole-outs were given in the form of subsidies to "lifeline users" of electricity, microfinance programs for wives of public tansport drivers, upgrading of government tertiary hospitals into primary hospitals, cash for poor families and the elderly, and relief and the rehabilitation efforts in the areas ravaged by Typhoon "Frank" in Panay and other islands.
The P8 billion does not include billions more spent for subsidizing cheap rice for the poor and unprecedented investment in infrastructure projects in the countryside which are creating jobs there. The Department of Finance stated that it is still reasonable to maintain the vat on oil instread of removing it despite increases in oil prices.
Based on some studies, the poor have not been affected much by the VAT on oil because they primarily buy basic nescessities such as rice and food products, which are VAT-free. We know that the poor doesn't use car, if the government were to remove VAT imposed on oil, it would actually favor the rich, who use more fuel. Hence, the suspension of the 12% VAT on oil also will favor only those with high incomes.
Suspending the 12% VAT on oil would result in a foregone revenue of P73.1 billion. The projected budget deficit for this year is P75 billion. Lifting the VAT would double the projected budget deficit for 2008. Without the e-VAT which is the government's most constant and sure-fire revenue source, the economy will collapse.
The government's e-VAT bill helps for social service and infrastructure and has received good credit standing from international agencies . Maybe the Malacañang has to know more the potential the e-VAT has to do with the economy. The government should maximize use of the revenues for national food security program. I believe lowering or suspending the bill is no longer an issue if the poor people get ease from the day to day burden they encounter.
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WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
Transcript Editor, Marketing Officer-podwriter transcriptions, Event organizer, Entrepreneur, owner of memokitchen.com site at memokitchen.com
WEB CONSULTANT / PASTOR at LIGHT OF THE WORLD CHRISTIAN CENTER