Junk EVAT

As I See It : Don't raise taxes in the midst of poverty

Neal Cruz opinion@inquirer.com.ph
Inquirer News Service

REP. Joey Salceda is right; Finance Secretary Margarito Teves is wrong. If President Gloria Macapagal-Arroyo implements the expanded value-added tax (VAT) -- assuming the Supreme Court lifts the restraining order on it-it will be like she is giving up the presidency to which she is now clinging desperately. The expanded VAT will raise the prices of everything to levels beyond the reach of the poor. Then watch the angry masses get together to kick Ms Arroyo out of Malacañang. We are seeing the start of this gathering storm in the many -- though still relatively small -- protest rallies in urban areas. We are seeing and hearing this in the angry faces and voices of the poor. But who wouldn't be angry if his or her family is hungry? In fact, even middle-class families will find themselves unable to make both ends meet, and they, who have kept away from the rallies so far, will eventually join in the storming of the presidential palace.

You don't raise taxes in the midst of poverty, when the price of oil is skyrocketing. A leader would be pretty stupid to do that. A leader who does that deserves to be kicked out on her butt. The price of fuel has a chain effect on the prices of everything else that is transported and requires the use of electricity.

A sensible leader will, in fact, ease taxes during such times to provide the people relief. Leave the people with more spending money and they will boost the economy as they buy more of the goods produced by factories that will, in turn, produce more and pay more taxes. Take more money out of them in the form of taxes and the economy contracts; factories will close shop and lay off workers, and people will suffer and get very angry.

That is why we now see the paradox of the opposition. It opposed the expanded VAT in Congress and filed the petition for restraining order with the Supreme Court; it is now making a surprising turnabout and protesting the law's proposed suspension. Higher taxes will do what the opposition has been unable to do so far-kick the present occupant out of Malaca¤ang.

It is understandable why Teves is bullheaded about implementing the expanded VAT now. His primary job as finance secretary is to raise funds for the government. There is nowhere else to get those funds easily but from the people even if their pockets are nearly empty. Suspend the expanded VAT and Teves will fall flat on his face. The government will not only go bankrupt, it will fall deeper into the debt hole. In fact, Teves' stubborn stance is enough to make you believe that he is actually a secret agent of the opposition.

Other government officials and congressmen and senators who, you think, want President Arroyo to stay on longer, are actually looking out only for themselves, not the people. They are afraid that if the government does not collect the expanded VAT, it will have no money to pay their salaries, allowances and pork barrel. To hell with the people if it means doing away with their pork barrel. It seems it is only Salceda who has some sense left in him.

How will the government get funds to support itself? Do the same thing that prudent families do when their income drops. Cut on spending and do away with the non-essentials. Plant "camote" [sweet potato]. Try to earn extra income somehow without violating the law.

If the government abolishes the wasteful and corrupt pork barrel system, it will save tens of billions of pesos. If it cuts all government allowances by just 20 percent across the board, it will save billions of pesos more. If it collects the fines from drivers and pedestrians who violate traffic rules, it will be able to collect additional billions of pesos. What's more, it will restore sanity in the streets and save billions of pesos in oil bills being burned by all those vehicles creeping along in the traffic and polluting the air. If it plugs all the holes in the tax collection system and jail the tax collectors pocketing collections, it will earn more and save more. There will be no need for the expanded VAT.

The expanded VAT is the lazy man's solution to the problem of lack of funds. Instead of collecting the tax himself, the government forces others to collect it-like it does in collecting the withholding tax and the excise taxes on liquor and tobacco.

It has been the mistake of many governments, past and present, to see the people as a gold mine with an inexhaustible lode of tax money. But many governments have fallen as people revolt because of oppressive taxes. Hungry people become more desperate and reckless. We are nearing that point of despair. But as history has shown, rulers usually don't see it coming until it is too late.

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It is very easy for Ms Arroyo to say that to save on fuel, we should walk more and bike more. Easier said than done. Where would you bike? Where would you walk? There are no bike lanes anywhere except around the Quezon Memorial Park in Quezon City. The sidewalks are full of parked vehicles and sidewalk vendors. Pedestrians have to walk right on the streets where they suffer the risk of being sideswiped by speeding vehicles. In some areas, like Tandang Sora Avenue, Quezon City, paved sidewalks have been totally eliminated. Thousands of students going to and from the Culiat and New Era schools have to walk right on the roadway, on the outer sides of the vehicles illegally parked along the avenue.

In areas where there are sidewalks, the pavements are uneven, with many cracks and obstacles -- even if there is a law that says sidewalks should be friendly to the old, infirm and disabled. Try walking some distance on one of Metro Manila's sidewalks and you will see how hard it is to do this -- that is, if you survive the experience. Walking on the streets of the Philippines is much more dangerous than walking in the war zones of Iraq.