IF former four-term representative and incumbent Bataan Gov. Enrique “Tet” Garcia (now on his third consecutive term) had his way in this country, he would immediately change a few things that, he believes, have only brought needless, untold hardships to the consuming public.

First of all, he would have the Oil Industry Deregulation Law (Republic Act 8479) repealed (he’s been battling oil deregulation since 1997), and repealed with extreme prejudice. Then he would just as quickly reinstate controls on the industry, both in the pricing and non-pricing aspects, to ensure that the public is amply protected from the avarice of the oil companies.

This is only one of his major or pet advocacies. His renewed call for a return to oil-price controls was the subject of an earlier column (Tet’s offensive: Let’s junk oil deregulation, Business-Mirror, September 20 issue).

The other thing that he believes should be scrapped altogether is the loophole-riddled value-added tax or VAT system (whether expanded or shrunk), which, he says, has miserably failed to increase the government’s revenues as promised while making Juan de la Cruz suffer “the whole enchilada.”

“To quote columnist Dik Pascual of the Philippine Star’s apt description of the VAT, it is ‘sheer stupidity compounded by sadism’ to continue imposing it,” Governor Garcia said.

As Governor Tet has been advocating since the beginning of the 8th Congress (1987), a law should be passed repealing the loophole-riddled deduction-type VAT with its output/input tax-credit mechanism, and reinstate the many fool-proof sales-tax systems (that were based on gross) they replaced. By simply reinstating these loophole-free sales taxes, the government’s tax take would dramatically increase and automatically relieve the public of an unnecessary burden

By getting rid of the VAT, the public would be relieved of a heavy tax burden that has not helped increase government revenue, Governor Tet said.

“At a glance, it may seem contradictory, but let me illustrate: Out of the 12-percent output tax that motorists would be made to pay in the latest expanded application of the VAT, only less than 3 percent would go to government coffers. The balance of more than 9 percent would go to tollway operators by way of input-tax credit. The same thing is true in all the goods and services covered by VAT.

“Therefore, if we get rid of the VAT or E-VAT, we also get rid of the tax (input credit) we pay, which does not go to government coffers. By reinstating the sales-tax systems based on gross, we would have to pay only the taxes that go directly to the government.”

I read somewhere that theoretically, VAT avoids the cascade effect of sales tax by taxing only the value added at each stage of production. It is for this reason that VAT has been gaining favor over traditional sales taxes. In principle, VAT applies to all provisions of goods and services. VAT is assessed and collected on the value of goods or services that has been provided every time there is a transaction (sale/purchase).

It is further explained that the seller charges VAT to the buyer, and the seller pays this VAT to the government. If, however, the buyer is not an end-user but the goods or services are costs to its business, the tax it has paid for such purchases can be deducted from the tax it charges to its customers. The government only receives the difference; in other words, it is paid tax on the gross margin of each transaction by each participant in the sales chain.

Whew! The system is so complex, no wonder Governor Tet is saying it is loophole-riddled. The loopholes—or leakages—he could have been adverting to could probably be discovered at every stage of production of a commodity or service.

But why was the VAT system adopted by the Philippines in the first place? Possible answer: It was recommended by the International Monetary Fund (?).

And Governor Tet has this shocker of a revelation (it was new to me, as far as I was concerned). He asked:

“Did you know that as early as 1987, the IMF had recommended the exact same cascading system of taxation to the federal government of the United States?

“After an exhaustive study, the US rejected it for two reasons—it would require the hiring of 25,000 additional Internal Revenue Service personnel and cost the federal government an additional $700 million annually just to keep it going.

“While VAT has a self-policing feature in the paper trail that it leaves, it was, in the end, junked by the US government for being impracticable.” So there you have it. If it’s not good enough for the US, should it suffice for the Philippines?

His third other advocacy at the moment has something to do with the tax share of local government units of the national budget. The governor is also fighting for the inclusion—in next year’s budget—a one-time payment to LGUs of the accumulated shortfalls in the payment of their Internal Revenue Allotment. He wants it to be a permanent feature in the General Appropriations Act from 2012 onward that the 40-percent IRA of all LGUs be automatically paid in full every year.

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Mea culpa! Mea culpa!

Readers Dick McGervey and Remrick Palagan wrote to point out a number of factual errors in my previous column entitled, “Filipino Women are lucky,” Omerta, September 23 issue, Business-Mirror.

There were factual errors indeed, and I thank them most profusely for setting the record straight.

Mr. McGervy wrote:

“Great article, but the theology of Mary is quite shocking. Mary is not part of the Triumvirate that would be God the Father, God the Son and God the Holy Spirit. To say that Mary is part of the Triumvirate is precisely what Muslims falsely accuse Catholics of, namely, worshiping Mary….”

Like Mr. McGervey, Mr. Patagan noticed how glaringly wrong I was when I wrote, “the irresistible, and central, feature of Catholicism is the Holy Trinity, where the Holy Mother of God [Virgin Mary] is part of the Triumvirate through which salvation can be won.…”

Mr. Patagan also maintains that long before the Spaniards came, “women had enjoyed a degree of status and influence.”

He cited the existence of the babaylan, which, he added, the Spaniards tried to obliterate.

Mr. Patagan also pointed out that as social scientists have pointed out, we have been essentially a matriarchal society and that we imbibed patriarchal influences with the advent of Catholicism.

All I can say is touché (!) and mea culpa, mea culpa, mea maxima culpa. The error is mine alone to own.

Actually, in the evening after I had written that piece, I realized what a stupid mistake I had just committed (about the Holy Trinity). But by then, it was too late to correct it. Thanks to the eagle eyes of our smart readers, learning becomes a two-way experience.

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