esposo’s “revolutionary situation” #VAT

31 March 2012

william m. esposo, philstar columnist and true-blue, i mean, -yellow, aquino supporter, is as annoyed about #noynoying as leftist (pa ba? more like red-turned-yellow) joel rocamora.  and esposo is now calling the youth activists (who coined “noynoying”) “ANAYchists,” as in termites, who undermine stability and peddle unrealistic solutions to the oil price hikes.

i think it’s a poor metaphor.  having to deal with termites where i live, i know they only feed on wood, and they are destructive but can be held at bay.

in fact, there’s nothing wooden about government (well, except the forests under the care of the state, which are mostly gone, converted into cash by a different exclusive breed of anay); and there’s nothing destructive about these youth activists who are really more like askal watchdogs whose barks are worse than their bites.  and it’s not as if, historically, government has not vigilantly, and successfully, held them at bay, as rocamora would know.

of course, the noise that squealing yelping high-alert watchdogs make when faced with suspicious smells and sounds (lalo na when something’s rotten sa kapaligiran) can be most irritating and can keep you awake at night, especially if you or your boss is in charge for another four years.  you must now realize that you guys promised too much, and so “noynoying” has gained traction.  kung walang corrupt, walang mahirap, you said, a promise to address corruption and poverty.  little did we not know that the fulfillment of the promise would hinge on chief justice corona’s and gloria arroyo’s persecution, i mean, prosecution, and conviction.  meanwhile the corruption everywhere else continues, nothing has changed, except maybe it’s gotten worse.

“noynoying” is a clever critique of the president’s do-nothing approach to the spiralling costs of everyday essentials due to the spiralling costs of oil products and electricity.  true, the president is in no position to influence the global ups and downs in the price of oil.  however, he IS in a position to undo gloria arroyo’s VAT on oil products and electricity, which, until gloria, were VAT-exempt, like food and other essentials.  and he IS in a position to ask congress as well to revisit and amend, nay, railroad amendments to, EPIRA, particularly with regard to provisions that allow power companies to pass on all kinds of costs to consumers.

instead, the aquino admin is on damage-control mode, but the defense is weak, we’ve heard it all before, ito na rin ang mga excuse ni gma noon.  but maybe esposo, and his president’s men, have forgotten, or weren’t paying attention:

To scrap the oil deregulation law is to subsidize the petrol needs of Filipinos. That’s something we cannot afford to do and to do it is to upset the fiscal position that we now have that’s generating rating upgrades and attracting foreign investors. To remove or reduce the VAT on petrol will result in the same worse scenario of wreaking havoc on our fiscal position. The ANAYchists simply want to provoke a revolutionary situation.

esposo might not be wrong about “a revolutionary situation,” bully for the youth activists.     but he is wrong about everything else.  “subsidize”?  we have always paid, we will continue to pay, hangga’t kaya — it’s not as if we have a choice — but please, without all the patong, that is, taxes upon taxes.  and what foreign investors?  given our high power rates mismo (no thanks to EPIRA and VAT) and poor infrastructure, among many other unattractive features, all we ever attract is “hot money” (pang-stockmarket lang) that goes out as quickly as it comes in, the foreigners and local elite laughing all the way to their banks, without any real positive effect on the economy on the ground.

as for credit rating upgrades — highly desired because it allows government to borrow more and more, again and again, from foreign creditors, borrowing and spending, beyond our means, and nothing much of significance to show for it except a ballooning foreign debt.  upgraded credit ratings are based on enhanced capacity to repay loans, that is, based on increased revenues.  yeah, right, at our expense, an imposition, no less, of an obscene 12% VAT on essential petroleum products and electricity (hitherto VAT-exempt, it bears repeating), on top of other taxes (it bears repeating).

this email addendum to When VAT on oil is “crooked road” (thanks, rudy coronel) explains further why arroyo then was, and aquino now is, loathe to give up VAT on oil.  after all, it’s like, you know, a la juan tamad: without having to lift a finger, cash comes rolling in, never mind where it’s coming from.

Petroleum products are perhaps the single biggest source of taxation in this country. This country consumes 300,000 barrels of oil per day. There are 159 liters to a barrel. Local oil prices are now about P60.00 per liter for premium gasoline; P45.00 per liter for diesel. While there are other oil grades in the marketplace, gasoline and diesel together comprise the biggest slice of the whole cake. From this alone, you can imagine how much Vat oil products contribute to the country’s coffers. Add to that the excise tax (about P4.50 per liter for gasoline, of course lower for other grades) and the customs duties due on imported crude and finished oils. This is the reason why P-Noy, and even GMA in her time, will be, and had always been, reluctant to give up the Vat on oil. The thing is we have the highest Vat in the region, and yet I’m sure, were it not for the continuing rise in the global prices of oil, we might wake up one day with another proposal to increase the Vat rate. Vat, kasi, is one of the easiest taxes to collect. But Vat, you will be surprised, do not exist in the US, where tax collection is relatively more efficient. Vat is common whenever and wherever there are problems in tax collection, like in these parts. The irony is, year in and year out, we are not unlike a golf ball stuck in a sand-trap, unable to rise up from our budget deficits. My take on this is, throughout our history we have tried, but vainly, to solve our budget woes by imposing newer and newer taxes. At least for once, why can’t we try another strategy: trim down our expenses and manage our budget more responsibly?

here’s an elected congressman who’s talking sense, too, no less than san juan rep jv ejercito, more power to him:

At the House of Representatives, San Juan Representative Joseph Victor Ejercito has filed House Bill No. 6014 exempting petroleum products from the 12-percent VAT to provide immediate relief to motorists.

Ejercito, chairman of the House committee on Metro Manila development, said classifying petroleum among the VAT-exempt products was a more efficient and effective alternative to the government’s subsidy program, the Pantawid Pasada Program, which gives public transport owners discounts on their fuel purchases.

“Neither the bus, jeepney and taxi operators nor drivers agrees it is the solution to the skyrocketing cost of gasoline, diesel, kerosene and LPG. It does not benefit the people at all,” he said.

On concerns of the government that removing the VAT would reduce tax collections, Ejercito claimed that the government’s share from the

P45-billion annual income of Philippine Amusement and Gaming Corp. (Pagcor), P31-billion income of Philippine Charity Sweepstakes Office (PCSO) and P43-billion royalties from the Malampaya gas project would be “sufficient to replenish the lost revenues.”

Ejercito noted that the VAT was imposed in 2004 to boost revenues and lower the government’s dependence on borrowings that were pegged at 78.2 percent debt to the gross domestic product ratio. With the debt-to-GDP ratio falling to 55.4 percent, Ejercito said it was time to reconsider the VAT as it has already served its purpose.

so, again.  it is not true that gov’t is helpless on rising oil prices.  the president can drop VAT, which would bring down prices all around, give some measure of relief all around.  yes, this would reduce government’s resources but, like coronel and jv say, there are other sources, and there are other ways of raising revenue.

i would add: improved tax collections from the rich, the moneyed classes who are masters at, and get away with, undervaluing their assets and understating their incomes (as can be sensed from the corona trial); a rational debt policy — let’s not rush to pay obligations in advance just so we can borrow again — the nation is lubog na sa utang as it is.  and what about the pork barrel, and the presidential coffers — it’s time our government officials stopped enriching themselves while-in/through-their offices, augmenting their salaries with huge allowances and other emoluments, as though the money weren’t urgently needed elsewhere.

”yun nga lang, the president would have to rise to the challenge, demonstrate some creativity, perspicacity, and balls, so to speak.  and yes, william esposo, it would amount to a revolutionary situation of sorts, one that the masses would happily support, for sure, as in people power, remember?  revolution can be fun in the philippines.

 

18 Responses to esposo’s “revolutionary situation” #VAT

  1. April 1, 2012 at 12:33 am

    While i sympathize with those unduly burdened by VAT (because it is regressive), I noticed an idea here from the statement that “..all we ever attract is “hot money” (pang-stockmarket lang) that goes out as quickly as it comes in, the foreigners and local elite laughing all the way to their banks, without any real positive effect on the economy on the ground.”

    If the two — foreigneres and local elite — laugh when the stock market rises, somebody must cry. Who? The small domestic investors? The local consumers? I suspect the foreign investor also gets clipped (though he doesn’t know it at first) along with the customers of local big businesses.

    I think the President’s men realize how difficult it is for government to be the promoter of the proverbial level playing field. Perhaps they admit such helplessness through inaction. Perhaps there are enough incompetents among them, which ought to make us average folks alarmed. But how do you solve that kind of problem?

  2. April 1, 2012 at 3:54 am
    GabbyD

    “On concerns of the government that removing the VAT would reduce tax collections, Ejercito claimed that the government’s share from the P45-billion annual income of Philippine Amusement and Gaming Corp. (Pagcor), P31-billion income of Philippine Charity Sweepstakes Office (PCSO) and P43-billion royalties from the Malampaya gas project would be “sufficient to replenish the lost revenues.””

    parang malabo ito. IF the govt is already getting its share from Pagcor, etal, how, can these replenish the lost revenues of a vat exemption?

  3. April 1, 2012 at 6:25 am
    GabbyD

    also, to correct your friend, the VAT is now a standard tax tool in the majority of countries. the US is the exception. the US is also thinking about instituting VAT.

    from a brooking’s paper on VAT:

    “In contrast, many OECD governments and state government offer preferential or
    zero rates on certain items like health care or food to increase progressivity. This
    approach is largely ineffective because the products in question are consumed in greater
    quantities by middle-income and wealthy taxpayers than by low-income households.
    Furthermore, this approach creates complexity and invites tax avoidance as consumers try
    to substitute between tax-preferred and fully-taxable goods and policymakers struggle to
    characterize goods (for example, if clothing were exempt from the VAT, Halloween
    costumes classified as clothing would be exempt while costumes classified as toys would
    not)”

    the solution is better targeting — know who the poor is, and help them directly with subsidies and tax cuts or cash transfers. this is what the conditional cash transfer program is about.

  4. April 2, 2012 at 10:15 pm
    manuelbuencamino

    The VAT goes to socialized spending – schools, roads, health, housing etc.

    The argument for removing the VAT on oil and electricity echoes the line of the Republican Party in America – that less taxes leave more money for individuals to spend as they see fit. And that is good for the economy.

    The argument for keeping the VAT echoes the line of the Democrats – that government is in a better position to spend the money for the greater good of the greatest number.

    Which philosophical approach to governance is better?

    • April 2, 2012 at 11:52 pm

      i think you’re quite correct on the effect of vat, even if it’s a general revenue tax. the fiscal situation is such that the fixed overheads – salaries for the public sector and interest on public debt – eat up the bulk of revenues anyway.

      but i also think that vat here should be seen in the context of income tax, which is easily avoided or evaded by the rich. one can see this in the unfolding drama between the bir and manny pacquiao.

      so, the 1% may opt to cut vat so long as they can keep their tax loopholes. this means that a lower vat or one with a reduced base may spell relief for the poor and middle class, but it takes away public funds for the poor. cutting the vat seems to favor the rich and middle class!

      perhaps the sensible solution is to cut the vat, find a way to get the 1% to pay more income tax (not easy but pnoy can do it), and ensure that politicians don’t play with public funds (near impossible but doable if we can shame them into giving up pork). but perhaps this is too idealistic.

      • April 4, 2012 at 3:01 pm

        some distinction should be made between the upper middleclass, who can afford vat, who aren’t complaining, and lower middle classes who can’t afford vat and who rightly protest how it eats into funds for food and other essential needs.

        • April 4, 2012 at 7:03 pm

          Agree with you Angela. Several years ago, gasul was P300, and a lower middle class electric bill was less than P1000/month. Now, gasul is at around P900, and electric is at P3000 or so. No wonder, PNoy has lost support from class D.

          There is a little hope. At some point, the middle class will install solar panels, use now-cheaper LED lights, and let the electric big boys go to you know where.

  5. April 2, 2012 at 10:20 pm
    manuelbuencamino

    By the way, I prefer the term of Dahli Aspillera for noynoying: Nguynguying. It’s catchier than Billy’s Anaychists, which gives gives gravitas to whining.

    • April 4, 2012 at 3:05 pm

      ah i thought it was yours, nguynguying. apt for masses who have cause to complain. and it’s not another term for noynoying, which is apt for what the prez does or doesnt do.

  6. April 4, 2012 at 8:00 pm
    manuelbuencamino

    To complain when there are reasonable/rational solutions to solvable problems is legit, to complain when one cannot offer a reasonable/rational solution to a problem that is beyond one’s control is indolent whining or nguynguying. Thus one can complain about the lack of adequate disaster rescue or mitigation but it would be nguynguying to complain about typhoons or earthquakes. Such is complaining about the price of oil. A realistic solution is what is needed and price controls or VAT reductions without a corresponding proposal for revenue substitution are neither realistic nor rational as it would bankrupt the country. Nguynguying ang tawag diyan.

    • April 4, 2012 at 8:48 pm

      obviously we differ on what’s realistic and rational. and insisting there’s no other way but the president’s (and the previous administration’s) is as bad as noynoying. where’s the promised CHANGE?

      • April 5, 2012 at 12:20 am
        manuelbuencamino

        Angela,

        What I’m saying is no one has proposed a solution that is more then just band-aid, not the president, not Congress, and not the experts out there.

        I’m also saying that the proposal to eliminate VAT and re-institute price controls will cause more problems than it will solve because Congress and the president will have to deal eventually with lost revenues brought about by the elimination of VAT and deficits brought about by subsidized prices. So Congress and the president will have to enact revenue measures or make spending cuts or both. In effect, we would still be in a hole although in a different one. But in a hole nonetheless. Change would mean getting out of that hole but no one seems to know the way out. So nguynguyan na lang hanggang meron makahanap ng pinto palabas.

        • April 5, 2012 at 2:35 pm

          i’m not asking for subsidized prices, i’m asking for vat-exemption for oil and electricity, like in pre-arroyo days. and yes, of course, the president and congress and the rest of the rich are just happy enough with things as they are. status quo. obviously no one cares enough that for the greater number of filipinos, it’s hard times, harder, hardest yet under your president. nguynguying over noynoying? absolutely.

          • April 5, 2012 at 9:46 pm
            manuelbuencamino

            Like it or not he is your president too until 2016 unless he is overthrown. Anyway, maybe Men Sta. Ana’s take on this VAT exemption thing at http://www.uniffors.com/?p=6525 explains what I’ve been saying.

  7. April 7, 2012 at 4:49 am
    ironickme

    While the whole world is busy dealing with high oil prices due to the middle east unrest, the filipinos are busy calling each other names. Go figure.

    • April 7, 2012 at 11:59 am

      (sigh) james fallows was right. damaged culture. but everyone’s in denial

  8. April 9, 2012 at 4:50 am
    ironickme

    gma is in hospital arrest, fg is being charged in court, abalos is in jail, palparan is in hiding, merceditas resigned. these are once powerful people. While others don’t see any changes at all, I could sleep at night knowing my president (even if i did not vote for him)is not corrupt.

    It could have been worse. Erap as the president and gma the prime minister.

    • April 10, 2012 at 12:35 am

      yes it could have been worse, but it is not enough to be not-corrupt, if it’s just him and a few others.

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