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"THE
best is yet to come,” most frontpage reports, including
ours, quoted President Arroyo as saying on Tuesday,
implying that 2007 will probably be a better year for
Filipinos. How? The President didn’t elaborate much.
But as
much as one wanted to think that indeed, the next year
holds so much promise—especially given the recent
positive numbers from the usual indicators—certain
things aren’t quite right in our universe, and this
paper’s two successive main stories provide us a clue to
what these are.
The
first story deals with a government report focusing on
the curious contrast between many top 500 companies
reporting rising sales even as their corporate income
taxes are declining. The second, culled from a Bureau of
Internal Revenue (BIR) audit, shows the ridiculous
situation where 17 oil refiners and importers got value
added-tax refunds of P32 million in 2005, even though
the local oil industry sold P326.95 billion worth of oil
products in that year. This would have been easily
explained as owing to the fact that before the passage
of the expanded VAT law lifting exemptions of certain
sectors, petroleum was exempted—hence, the refunds.
Still,
the unkind cut with the oil industry’s 2005 refunds, at
least as far as the public is concerned, is that the
refunds were so much that this sector ended up paying an
effective VAT rate of negative 0.31 percent. In
contrast, other sectors similarly entitled to refunds
paid effective VAT rates of from 3 percent to 6 percent.
From all
indications, 2006 is a slam-dunk year for many of the
business elite who raked in billions in sales while
paying disproportionately low sums in taxes. In some
cases, the government—which means the taxpayers, those
from whom were automatically deducted withholding tax—
even subsidized these megabillion businesses,
specifically the oilmen, in a classic and shameless case
of economic concentration by “trickle up.” Not unlike
the vaporation part of the water cycle, except that
here, as water rises to the atmosphere, it never falls
again as rain, to soothe the mortals below.
The year
2007 therefore doesn’t seem to promise the best for us
ordinary mortals who are left or stuck here in the
Philippines. We are going to be continually squeezed
through higher VAT rates and high income taxes while
suffering from the continued lack or inadequate economic
and social services—simply because the government, or
the sleazy characters in the bureaucracy, are giving
away the money collected from us to subsidize the
businesses of the rich and the powerful.
For
ordinary office workers who diligently pay their dues to
society through taxes, the VAT is the VAT is the VAT and
we are forced to pay 12 percent more money every time we
buy life’s essentials or eat at restaurants. Or, as we
noted in this same space a few months ago, even for the
lowly bedpan that our old or infirm folks use. Yes,
that’s 12 centavos going to the coffers of the State for
every peso that we shell out for goods and services to
sustain our miserable existence.
Compare
that to the petroleum industry, with its P326.95 billion
in sales for 2005. It turned out—based on the report by
our reporter Jun Vallecera—that the effective rate it
got from the government, based on the actual payments
and refunds obtained, was negative 0.31 percent.
What
that means is that effectively the 17 petroleum refiners
and importers got a subsidy from the government through
the refunds that ultimately come from the pockets of
taxpayers.
This is
cruel! Every person who paid for his burgers and fried
chickens at Jollibee is actually subsidizing the oilmen.
It’s Robin Hood in reverse, a classic case of robbing
the poor to give to the rich!
Of
course, the petroleum refiners are not alone. The
effective VAT rate for motor vehicle assemblers is 0.7
percent; telecommunications, 3.83 percent; tobacco, 4.7
percent; alcohol, 5.25 percent; cement industry, 5.16
percent; food manufacturers, 2.93 percent; chemicals,
2.58 percent; and real estate at 3.63 percent. We are
not yet privy to the details of these figures but we
could surmise that either they got lots of exemptions
because of loopholes or they simply did not pay the
right amount of taxes.
The same
theme runs through corporate income taxes. On Monday,
our reporter at Neda, Rommer Balaba, reported that
companies’ corporate income taxes are declining despite
the fact they have been enjoying rising sales. That only
means that through some creative accounting, companies
are not giving the right amount of taxes to the
government. And we could only assume that this
malevolence is happening because some people at the
Bureau of Internal Revenue allow them to do so.
And take
note that most of these industries already enjoy
government subsidies through fiscal incentives in the
form of tax holidays, duty-free importation of machines
and spare parts.
Cases
like these are the ones that disillusion a lot of people
in the middle and lower middle classes who are forced to
pay taxes through their withholding taxes. If one looks
at the composition of the government’s revenue
collection, the bulk of these taxes come from these
people who are not entitled to any “fiscal incentives”
from the State. No wonder that people from these income
classes usually leave for abroad the first chance they
get.
Stories
like this seem to confirm what is deeply wrong with the
Philippine society. In the history of nations, “economic
development” takes the form of catalytic sectors of
society creating wealth and diffusing them to society
through jobs, technological change, innovative products
and services, and their spillover effects. What’s
happening right now in the Philippines is the reverse, a
perverse phenomenon about a few economic elites
concentrating wealth and power through a process of
“trickle up.” |
