PRESS
STATEMENT
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As
if the endless increases in the prices of electricity, water, oil products
and consumer goods as well as fare rates are not enough, the government
now plans to increase the present value added tax (VAT) from 10 percent to
between 12 and 15 percent.
Spawned
by a huge budget deficit, the country’s economic managers have started
spewing a string of new tax measures including taxing text messages and
increasing the so-called sin taxes. “All
these proposals have one thing in common: they all intend to fleece more
taxes from an already impoverished working people”, Josua Mata, APL
secretary general, said.
However,
the latest proposal would hit the working people the hardest. VAT has been
proven to be a regressive form of taxation with the poor having to
shoulder extra costs in acquiring goods and services. The
proposed scheme, inspired by the International Monetary Fund (IMF),
reportedly aims to increase tax collection by an estimated P10 billion and
limit the year-end budget deficit to below P197.8
billion. “There
is definitely a need to reform the country’s regressive tax system, but
such reforms should be directed towards progressive taxation where the tax
burden is equitably distributed,” Mata added. It
is in this light that the APL calls on the government to give tax breaks
to workers who are reeling from the spiraling cost of consumer goods and
services as wages remained inadequate. There
is also a need to review the country’s tariff structures as the
unilateral reduction in tariffs has also contributed to the drastic
reduction of government revenues. Reforming
the tax system includes the pressing need for government to improve its
tax collection capability and to go after tax evaders like business tycoon
Lucio Tan, who was accused of tax evasion
worth P25 billion.
But
more importantly, there is also a need for government to review its
expenditures. After all, government will always be in deep financial
crisis as long as more
than half of the national budget is allocated for paying the national debt
that has now ballooned to almost P3.5 trillion. In fact, it has been
estimated that the country is paying almost P1 million every minute to
service its debts. Unfortunately,
the budget deficit will get worse before it gets better. Just recently,
government assumed the P500-billion
debt of
the National Power Corporation’s total
liabilities of P1.3 trillion that
it incurred due to privatization. “Unless
the government backtracks on its neo-liberal programs, the budget deficit
will be here to stay,” Mata said. Related link: |
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Alliance of
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