‘Gloria Arroyo calls it “Katas
ng VAT.” We say it is our blood, sweat and tears.’
The government, we have
been saying repeatedly, is the only economic actor benefiting from inflation.
Every time the price of a commodity rises, the government automatically pockets
12 percent of the increase through the value added tax.
The buyer, of course, is the immediate loser because he has
to fork over additional money for the same quantity of goods. The seller, while
outwardly an immediate beneficiary, is not actually a gainer either. He needs
additional money to maintain his normal inventory. The manufacturer likewise is
no better off as he has to cope with rising cost of raw materials, labor and
overhead.
Needless to say, this is plain theorizing. How much
additional taxes does the government actually get during a reign of high
inflation?
Surprise of surprises, the Department of Finance actually has
done some pencil-pushing. According to the DOF, every 1 percentage point
increase in the inflation rate brings in additional P10.5 billion in revenues.
This year, the DOF assumed an inflation rate of 4 percent to
come up with a projected revenue of P845 billion in revenues. With the surge in
food and oil prices, the Bangko Sentral now estimates a full year inflation of 7
to 9 percent. Taking the higher end of the estimate, that means P52 billion in
additional tax take.
Mind that the increase in collection will come about with no
extra effort at all from the bureaus of internal revenue and of customs.
Gloria Arroyo calls it "Katas ng VAT." We say it is the
blood, sweat and tears of the 85 million souls on these islands who every time
they buy something pay 12 percent of the purchase price to this corrupt,
profligate and insensitive administration.
Civil Service chair-in-waiting Ricardo Saludo scoffed at the
mounting calls for a suspension of the VAT on oil, saying a financially strapped
government will bring worse economic hardship than the one sought to be answered
by the VAT suspension. The peso will again weaken, government borrowing costs
will again rise and investors will be shunning the country because of the
over-all deterioration in the government’s fiscal position.
This is like saying that the fiscal health of the government
depends on soaring prices. Had rice and fuel prices not soared, fiscally the
government would now be in the intensive care unit.
Fiscal stability is a product of efficient collection of
revenues and of spending the money wisely. What has the government done lately
to expand collection of income tax, the other main source of revenue? What has
the government done to cut waste and curb corruption?
No need for an answer from Saludo or his principal who recently blew a few
million dollars in a junket to the United States even as her countrymen were
dying, going hungry, falling sick and losing their livelihoods due to typhoon
Frank.
