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By Neal Cruz / Inquirer News Service
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Date Posted: 15:49:47 07/07/05 Thu
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As I See It : Don't anger people some more with E-VAT
First posted 11:54pm (Mla time) July 03, 2005
By Neal Cruz / Inquirer News Service
AN INDICATION of the people's lack of trust in President Macapagal-Arroyo and the Supreme Court is the talk going around that the TRO (temporary restraining order) issued by the tribunal was upon orders of the President. Reason: To lessen the people's anger against the President because of the E-VAT Law, which will trigger steep increases in prices. I don't believe that.
If the President had wanted to staunch the people's anger, she herself would have suspended the implementation of the E-VAT Law. The people would have loved her for that. With the Supreme Court stopping its implementation, the credit goes to the high court, not to her. The opposition congressmen who filed the petition get double credit.
This is the worst time to increase taxes. The President is courting fate if she forces the implementation of the new E-VAT law. The people are already demanding her resignation because of the perception that she cheated in the 2004 elections, as exposed by the wiretapped tapes.
Why anger them some more? Prices of commodities and transportation fares are already going up because of the rising prices of oil products, why contribute to their further increase? Most people already have a difficult time making both ends meet, why make it harder for them by increasing taxes?
The best time to raise taxes is when the economy is robust and the people have plenty of money, not when they have little, to spend.
The President brands herself as an "economist" but forgets an elementary principle in economics. The economy suffers when the people have less money to buy goods manufactured by the factories. Because they sell less of their products, the companies pay less taxes. The government's tax income goes down.
One way to boost the economy is to give the people more spending money. That will produce a chain reaction that will mean more business for companies and they will pay more in taxes.
When the American economy suffered a depression during the time of President Ronald Reagan, that's what he did. He imposed a tax cut to give the people more spending money and the economy recovered. That came to be known as "Reaganomics."
Our "economist" President is doing the exact opposite, a policy that I call "Glorianomics." Instead of leaving people with more spending money, she is leaving them with less. Because of the high prices caused by VAT, people will be able to buy less of the goods produced by factories; business will suffer and companies will be paying less taxes. Instead of getting more income from a tax increase, the government will be getting less.
But the knee-jerk reaction of most organizations-from the national government to local government units, down to the barangay councils and homeowners associations-is to increase taxes and fees when their budgets fall short of their expenses. They think only of their needs, never of their constituents. They never stop to think that if they, the organizations, are having a hard time making both ends meet, their constituents are having an even harder time doing so.
To balance income and expense, the taxpayers tighten their belts and try to make do without the luxuries. The organizations can do the same, but they don't because they can always increase taxes and fees.
Do you know that the national government, by just plugging the tax loopholes, can collect an additional amount bigger than what it expects from the VAT? Expected income from the E-VAT is P31 billion. But the amount of taxes lost because of inefficient collection is estimated at P41 billion.
Cutting government expenses can lessen the budget deficit. Just by reducing all allowances by 20 percent across the board, the government will save tens of billions of pesos. Stopping the wasteful "car plans" for executives of most government offices, especially government corporations, will save billions more. And by abolishing the even more wasteful pork barrel system, the most glaring example of corruption, will save even more billions.
By the way, do you know that the government does not know how much its total tax collection is at the end of the day? The banks keep the money for several days and use them for themselves before remitting them to the Philippine Treasury. That was how syndicates composed of bank personnel and employees of the Bureau of Internal Revenue were able to steal taxes already collected by depositing them in different accounts.
When the shenanigans are discovered, it takes an eternity for the courts to send the culprits to jail. By the time they are convicted, they have already escaped abroad with the loot.
So how do you expect the people to be happy paying higher taxes when taxes already collected are stolen, first by the tax collectors themselves, then by the public officials the people elected into office? Why will they not protest paying higher taxes when they know that their rich countrymen are not paying their just share?
How much taxes did Iggy Arroyo, the second richest congressman, pay for his P300 million declared assets? How did he earn his wealth? If he inherited it, did he pay any inheritance tax?
How much personal income tax did the richest congresswoman, Rep. Cynthia Villar, pay? How much personal income tax did her husband, Sen. Manny Villar, the richest senator, pay? How much income tax did presidential son, Rep. Mikey Arroyo (on leave but still collecting all his salaries and allowances, including pork barrel), the 18th richest congressman, pay in taxes? And how did he acquire his riches?
How about the other richest congressmen and senators in the Top 20 list? How much income taxes did they pay? The people want to know.
Editor's Note: Published on page A14 of the July 4, 2005 issue of the Philippine Daily Inquirer
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