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A LOCAL
think tank said if the government is sincere in its
efforts to cushion the ill effects of high inflation, it
should consider removing the reformed value-added tax
(R-VAT) on oil and power along with the implementation
of other revenue measures to ease the burden of Filipino
consumers.
In a
statement, IBON Foundation said the removal of the R-VAT
on oil and power can decrease inflation by 0.5 to 0.8
percentage points.
This
means that if the R-VAT was removed in April, the think
tank believes the country’s inflation rate would not
have reached 8.3 percent but would have been pegged at
around 7.8 percent to 7.5 percent.
In April
all commodity groups recorded higher annual price
increases. Inflation for food, beverage and tobacco (FBT)
registered the highest inflation increase, which was at
11.4 percent in April, followed by fuel, light and water
(FLW), which rose by 8 percent.
“Raising
revenues through a regressive VAT is convenient only for
the government, which, amid the spiraling cost of basic
goods and services, should implement revenue-generation
measures that do not unduly burden the poor Filipino
majority, which is unfortunately what the regressive VAT
does,” IBON said in a statement.
Further,
IBON said other revenue measures could even generate
more funds than the RVAT on oil and power. Some of these
measures include the improvement of revenue performance
and efforts to increase tax collection.
IBON
said that according to the National Tax Research Center
(NTRC) 2006 data, improving the government’s revenue
performance could earn the government an average of P57
billion annually in uncollected VAT on other items other
than petroleum products, and P82 billion in uncollected
corporate taxes.
On the
other hand, if the government increases its
tax-collection efforts to 16 percent of gross domestic
product (GDP) from 14 percent, the government can
collect at least P94 billion in a year.
“These
revenues are more than enough to cover the revenue
losses from the removal of VAT on oil and power,” IBON
said.
Earlier,
University of Asia and the Pacific (UA&P) economist Cid
Terosa said high inflation places the country’s poorest
30 percent at a more financially difficult position, and
if inflation continues to increase, poverty in the
Philippines could worsen.
Terosa
said the simulation done by the UA&P showed that while
both the poorest 30 percent and the upper 70 percent
were affected by high prices, the upper 70 percent were
clearly better off.
The UA&P
economist said the university study showed that a
10-percent increase in food, cereal and FLW prices will
result in a 7-percent reduction in the budget of the
poor.
A
similar increase in food, cereal and FLW prices would
result in a 1.4- percent and 5.6-percent reduction in
the budgets of the upper 70 percent. This is higher than
the upper 70 percent, which only spends 25.3 percent on
food and 14 percent on cereals.
According to the study, the poorest 30 percent spends
around 31.1 percent of its budget on food and 28 percent
on cereals such as rice; 7.3 percent on FLW; 3.8 percent
for transportation and communication; 1.3 percent for
education; 9 percent for house rental; and 19.5 percent
for other expenses.
On the
other hand, the data showed that the upper 70 spends
more on all these. Data showed that the upper 70 spends
7.7 percent of its budget on FLW, 8.7 percent on
transportation and communication, 4.7 on education, 13.7
percent on house rental and 26.4 percent on other
expenditures. |
