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January 21. 2005
With
VAT increase, government is asking workers to cough up more, when it
should find the money somewhere else. We stand in resolute opposition
against the proposed expansion of the value-added tax coverage and its
2-step increase from the current 10% to 12 and 14% over the next two
years.
It is a sign of desperation and utter incompetence for the government to
shore up its ailing finances by reaching deeper and deeper into the
pockets of its citizens. The VAT makes no exceptions between rich
and poor, and
thus defeats the goal of an equitable taxation system.
In 2004 alone, there was an estimated 59% collection gap in VAT, which
clearly demonstrates that the problem still remains with tax collection
and administration. For as long as the government turns a blind eye to the
inefficiencies and corruption that underlie the underperformance of its
revenue generating agencies, then we fear that tax measures such as the
VAT
rate increase will only continue to line up the pockets of a few while the
broader ranks of workers everywhere will continue to foot the bill.
The cost of living in Metro Manila alone is already somewhere north of
P500, and continues to rise. A VAT rate increase will only end up being
paid for by workers as this regressive tax finds its way to products that
are
socially sensitive. Experience has shown that, the VAT is prone to abuse,
thru under-declaration of sales and over-declaration of claims for
input-VAT.
Government is well advised to plug the loopholes first before imposing
even more taxes. Lately, it has been reported that 22 independent power
producers
(IPPs) coughed up a combined total of P6 billion or so in taxes last year,
a figure scandalously no more than a fourth of the amount which the
million or so government employees alone shelled in taxes for the same
period. And yet these IPPs, with their lucrative and shady deals, continue
to rake in the profits with their take-or-pay agreements and other
subsidies, while workers
everywhere continue to subsidize their greed. How government can keep mum
to this injustice is inconceivably absurd.
The Alliance of Progressive Labor believes that a two-pronged approach may
offer a more viable and less painful way out of the fiscal blunder, which
the government seeks to evade by passing on the burden to the people. The
bankruptcy of its liberalization program, resulting in massive losses
after tariffs were lowered into indecent levels that were much more than
required,
even by the standards among the economic blocs were we have commitments.
A study conducted by the Labor Education and Research Network (LEARN) has
shown that the real problem is not the fiscal deficit but the jobs
deficit! Thus any proposed solution to the so-called fiscal crisis must
not be at the
expense of jobs generation! New tax measures (and spending cuts) will
force the economy to contract. An economic contraction simply means fewer
jobs when joblessness is already high and rising further. It means lower
incomes when real incomes are already falling. It means greater poverty in
the midst of widespread poverty!
Government should take a second, much harder look at these IPP contracts
and take a more aggressive stance against those that are grossly
disadvantageous
to the public.
If the government is truly serious in looking for money, then it has to
scrap the VAT expansion, find that money somewhere else, and stop picking
on
helpless workers everywhere.
---------------------
Josua
T. Mata
Secretary General
Alliance of Progressive Labor
Tel. No.: 927-6991
Mobile No.: 0917-7942
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