VAT-Man: The Dark Days

Even before the movie “Batman: The Dark Knight” is officially shown in Philippine theaters, the Arroyo Government, intentionally or not, already has its own version of the story. The title – “VAT-man: The Dark Days”. The film will start rolling when former senator Ralph Recto assumes the directorship of the National Economic and Development Authority (NEDA).

Recto is the author of RA 9337 otherwise known as the Expanded Value Added Tax (E-VAT) Law. E-VAT is a form of sales tax levied on the sale of goods and services. It indirectly increases the price of goods or services sold by 12% and said increase is passed on to the buyers. Because of E-VAT, Recto lost his re-election bid during the 2007 elections despite the endorsement of his wife, actress Vilma Santos. He ranked 14th and received only 10.7 million votes out of the 36 million turnout.

With Recto in the NEDA, it is not impossible to see gloomy and dark days ahead. First, Recto didn’t have any qualms when he pushed for the passage of E-VAT. Taking this into consideration, it is not also remote to hear Recto advocating for more and more taxes during his directorship.

Second, with Recto’s presence, there appears a slimmest chance for the proposal of the transport sector and the oil companies to scrap E-VAT on oil and fuel. The proposal is being driven by the fact that the country is facing an energy crisis. If E-VAT will be removed from on oil and fuel products, the prices will definitely decrease by 12%. In simple terms, if the price per liter of gasoline is P60, this will only be P52.80 less E-VAT.

With the price of gasoline lowered, the tendency for the costs of other goods especially food products will also decrease. The effect will then benefit not only the selected sectors under the “Katas ng VAT Program” of Gloria Arroyo but also the whole public as well.

Third, with Recto’s presence, the sequel of the ZTE Scandal will surely push through. It should be noted that NEDA has a great role to play when it comes to project prioritization – the reason why former NEDA chief Romulo Neri was placed on a hot seat. But with Recto, the phrase “Sec, may 200 ka dito” might shoot up to “Sec, may 400 ka dito”. Even “Ben’s Burjer” might develop to become “Ben’s Keyk”.

But of course, this is not to say that Recto is corrupt and not qualified, and that E-VAT is bad. The problem here boils down to the present system the country has. Corruption is so ingrained in the system and that during his stint as a senator, Recto failed to pass any law that will address the problem. Instead, what he enacted is a law that attracted more corrupt-minded individuals to the government just like throwing garbage in the street to attract more flies and dirt-loving insects.

In European countries like Denmark, Sweden and Iceland, the people do not complain if 60% of their income goes to the government. Their reasons: They know that their government will manage their taxes well and that during the times when they have no work, the government provides them subsidy and even help them look for a job. Thus, trust ratings for these governments are very high and corruption perception index are also very positive. In a rating where 0 as the most corrupt and 10 as the least corrupt, Denmark scored 9.4; Sweden has 9.3; and Iceland has 9.2. In addition, these countries are even included in the most livable countries in the world with very high Human Development Index.

The situation in these countries is very much the opposite of the Philippine situation. The government of Gloria Arroyo still ranks next to Indonesia and Cambodia in terms of being the most corrupt country in Southeast Asia with a rating of 2.5. Second, there is no such thing as government subsidy and if ever there is, the same is only due to patronage politics. There are even the allegations that a number of beneficiaries under the P500 government subsidy program are not really indigents but those considered to be the loyal supporters of the mayor and the barangay chairman. And third, when people have no work, they are just left to rot. Those who took the cudgels to go abroad and earn some money are not even assured of safety. So we have overseas contract workers returning home in coffins, a number of domestic helpers abused, and another number of seafarers held hostage. And these will continue if the Arroyo government is not reformed.

Hopefully, VAT-Man will learn his lessons from the 2007 elections. When he assumes his post in NEDA, may he realize that it is not the quantity of the amount of money that is generated but it is about how the resources are managed. And hopefully, during his incumbency, the word spreading around will be: Sec, wala tayo dito. Para sa Bayan lang lahat ito.###

(This article also appears in the column The Sidelines of the Albay Journal newspaper.)


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