COTANGENT – By Daphne Cardillo
“It is like ancient Egypt or Rome we have here,” was my final reaction after concluding my research on the Philippine tax system several years ago. We have a regressive tax structure that has not undergone a significant change since the early 60s when it was first studied. The bulk of our taxes are shouldered by the broad masses of our people coming from the lower income group in the form of indirect taxes mostly levied on basic goods and services.
Then came the Expanded Value-Added Tax (E-VAT), as if the Value-Added Tax (VAT) of 1988 was not enough to suck the remaining blood from the people’s deteriorating income. And the government had the gall to declare the E-VAT as a progressive tax after extending its claws to the higher income class.
VAT or E-VAT, this is a sales tax of which the burden is indirectly passed on to the people irregardless of income and status. Meaning, if you earn a hundred or a thousand or more a day, you pay the same amount of the overtaxed goods you buy in the market. These could be just about everything from cooking oil, sugar, soap and medicine, up to a bottle of liquor or a movie ticket which is a poor man’s way of escaping reality.
And now President Gloria Macapagal-Arroyo in her State of the Nation Address explains like a teacher how the country needs E-VAT, detailing the projects intended for the poor with the use of the oppressively acquired fund. And we have to swallow her words, for the fund is supposedly intended for social welfare and protection as a buffer to the global food and oil crisis, and undoubtedly, for her own political survival.
Look how terrible the government plays Robin Hood—stealing from the poor to finance the poor. Which poor the government intends to invest—no, merely subsidize—the money would require a lotto number combination, for there are a variety of poor in this country; the urban poor, the rural poor, the poor farmers, fishermen, teachers, entrepreneurs, employees, factory and agricultural workers, among others.
There is really nothing equitable when a 12% sales tax is levied on goods, properties, and services especially that subsequent sellers are subject to VAT. The more number of hands a commodity passes, the more tax imposed which is passed on to the consumers. Equity can be exercised reasonably with the imposition of a direct tax like the income tax of which the government has long been inefficient in its administration and resulting in very poor collection. Equity or social justice can never be realized by imposing a levy on the people’s daily consumption.
The government has found a very convenient way of raising revenue with minimum cost (and accountability) through the E-VAT. But the simplified taxation neglects the bigger bulk of tax revenues that needs proper and efficient administration. It is still a deplorable fact that tax evasion is a common practice especially by those who ought to pay more, like some giant corporations, dishonest businessmen and professionals. On the other hand, of those tax revenues that remains to be collected, actual collection only achieves a barely satisfactory percentage of the real target.
Much is still to be improved for a more defined declaration and strict implementation of our tax laws. And sound economic policy, so as to the subsequent lifting of this oppressive 12% sales tax to minimize social injustice.