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EVAT: Tales of Woes

• Inflation, Not Terrorism, Will Kill Us All
• C-VAT: Is This The Common Ground Solution?
• Let’s Talk VAT. Again.

Presidential Economic Adviser and Albay Governor Jose Salceda, in this news article, perfectly articulates the idea that has been on my mind since the onset of this skyrocketing oil price tax debate — To tax or not to tax? To retain or to remove the E-VAT altogether? This idea is to “reduce” (in Salceda’s term “cap” — thus the acronym “C-VAT”) the VAT imposed on oil. As I have expressed in

Presidential Economic Adviser and Albay Governor Jose Salceda, in this news article, perfectly articulates the idea that has been on my mind since the onset of this skyrocketing oil price tax debate — To tax or not to tax? To retain or to remove the E-VAT altogether? This idea is to “reduce” (in Salceda’s term “cap” — thus the acronym “C-VAT”) the VAT imposed on oil. As I have expressed in Ms. Susan “Toots” Ople’s article about Sen. Mar Roxas’s interview regarding his recommendation in this issue, I feel that

instead of imposing one over the other, why not reach some sort of “common ground” for both parties — those asking for the scrapping of E-VAT and those economic gurus in the government (or should I say the government collectively) by simply “reducing” the tax from the current 12% to a more acceptable and manageable percentage?

Reduce it to half or 2/3 perhaps? I’m not an economic expert so I can’t really compute for this but at least you get the picture.

I’m a firm believer of the importance of efficient tax collection that translates to services for the taxpayers. And although we have sufferred greatly after the implementation of E-VAT, I also acknowledge the fact that this rather “unpopular and aggressive economic policy” is what saved us then and probably is also the same policy that keeps us afloat amidst all these current crises. It has significantly reduced foreign debt and now it funds the subsidies and dole-outs that the government has been giving here and there — not that I approve or endorse dole-outs. It is clear that this so-called “sound economic policy” has served us in the past and I want to give a bit of credit where it’s due. But if you think of it, surging oil prices have also increased government oil tax collection to rather obscene amounts. This is because it’s percentage-based. So, the higher the market price of oil, the higher the government collections. i suppose then, that since this wasn’t projected to be as high as this anyway,

why not reduce the tax to a percentage that will equal to the expected amount earned based on projections at the time it was initially implemented and then cut back the rest?

This way, we still meet our targeted earnings for tax and at the same time, relieve the people of suffering. This will create a positive domino effect on prices across all basic commodites and services — something everyone will appreciate.

Although there’s a cliche that “desperate times call for desperate measures”, I believe that the situation is not yet as desperate as it appears. We can still turn things around. Of course, we can’t pull down pump prices completely. Oil price manipulation is a complicated game played by “oil gods”. The situation is the same all over the world so obviously we can only do so much. But even so, I think this is the best time to showcase our “survival instincts” to the world. The Filipino enginuity, talent and “out-of-the-box” solutions are recognized the world over. Let’s put on a show for all the world to see. Enough of catfights and word wars. Let’s find a common ground, support it and sustain it.

Suggested Further Reading:

• Slow Progress is Still Progress.
• Of BJE MOA-AD, ARMM Polls and Oil Price Updates
• Live and Let Live: The Non-Negotiable Solution
• Let’s Talk VAT. Again.
• Philippine Presidential Elections 2010 Amidst Economic Crisis — The Boon and the Bane