By keeping the value-added tax (VAT) on petroleum products and electricity, President Arroyo's administration is doing away with the harder task of collecting lost revenue from smugglers, an opposition senator said Tuesday.
"If President Arroyo would just collect unpaid taxes from smugglers, P142 billion a year, which is almost double the amount of VAT being collected by the government from power and oil," Sen. Francis Escudero told ABS-CBN's morning show, "Umagang Kay Ganda."
Escudero admitted that it would be hard to run after the smugglers' money, because of these people's "friendship" with some erring officials. However, he said, "the government's job [of providing the poor] is not always easy."
He said the government should always take the longer and harder way to earn more money and provide poor Filipinos' needs.
The opposition senator, who is rumored to have plans of running for a higher office in 2010, said if he was President Arroyo and if he really cared for the poorest of the poor, he would suspend or cut VAT on power and petroleum products.
"The poor Filipinos are suffering from the high prices of goods, which is aggravated by VAT. The government should stop ignoring this problem," he said, adding that Mrs. Arroyo failed him when he heard during her State Of The Nation Address (SONA) that she was keeping the administration’s hard stance on the VAT issue.
Mrs. Arroyo, during her 8th SONA, said that if Congress passes proposed measures suspending VAT, it would "strip our people of the means to ride out the world food and energy crisis."
"We have come too far and made too many sacrifices to turn back now on fiscal reforms. Leadership is not about doing the first easy thing that comes to mind; it is about doing what is necessary, however hard," she said.
Mrs. Arroyo added that VAT has helped the government achieve fiscal independence by paying the country's foreign debt through VAT.
Escudero said the statement is contrary to the pro-poor policies of Mrs. Arroyo's administration.
"How can it help the poor? The foreign creditors are not Filipinos, they are not poor and they are not affected with the high prices of goods in [our country]," the senator said.
Arroyo: Grim picture without VAT
Mrs. Arroyo described a grim future for the Philippines if some lawmakers continue to push for the removal of VAT on oil and electricity.
"If we remove the VAT, business confidence will decline, interest rates will go up, the more the value of the peso will fall, and the more commodity prices will rise. If we remove the VAT on oil and electricity, we will lose P80 billion for the poor. It will strip the majority of our people of the means to ride out the world food and energy crisis," she said.
As a result of her government’s decision to raise and keep the VAT, she said the peso appreciated from P56.50 to the dollar to P40.20, but fell to P44 after world oil and food prices shot up.
Arroyo said removing VAT on oil would mean losing billions of pesos that could be spent on pro-poor programs that include one-time cash gifts to smaller power consumers, food-for-school subsidies and college scholarships and subsidies for conversion of diesel-run jeepneys to LPG, CNG or biofuel.
She added that future VAT collections would be used to fund more subsidy programs while investing in long-term solutions to address the problem of high fuel prices and food self-sufficiency. She said among the programs funded by VAT include an irrigation component of the San Roque Dam Project, more LandBank loans for farmers and fishermen, and subsidized rice procured by the National Food Authority.