E-VAT ATENISTA SAYS...

This is part of a bigger effort to address the country’s budget deficit. We need to increase our tax collection to sustain the government’s delivery of basic services. While we can conceptually reduce government expenditures, we can only reduce it by so much because the public relies on government for these basic services, which includes education and medical services.

If we increase the VAT rate from 10% to 12% in 2006, we can raise as much as P35.12 billion more. On the other hand, if this measure is coupled with the repeal of the VAT exemptions mentioned above and other provisions of the VAT bill, we can raise between P97-105 billion assuming 70% collection efficiency. Raising these additional revenues is expected to translate to the strengthening of the Peso-Dollar exchange rate and better interest rates arising from improved investor perception of the Philippines.

The long term benefits from this E-vat law outweigh the short term costs. For one, the costs are equitably distributed, thus the poor will not suffer much with the additional tax expenses. The services that will bear fruit from these incremental revenues can in the long run bridge the gap between the rich and the poor.

The new EVAT law, GMA said, will entail some sacrifice in the short run but it promises lasting rewards in the form of more jobs and livelihood opportunities, better social services, more infrastructures, less debt, and more and better financing for rural programs.