Another burden to workers as new tax measures unveiled

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.