The Ele-VAT in the Room

Credit: UNTV

Philippine politicians are a weird bunch. Take for example Sen. Ralph Recto, who seems to be trying to garner cheap goodwill by authoring a law that raises the tax exemption levied on 13th month paychecks. At face value, the 36.1% of the working force that comprise the non-underemployed segment of that group (presumably those that are guaranteed a 13th-month pay) would be absolutely ecstatic upon hearing the legislative move to take less from their Christmas bonuses.

Notice how I snuck in the adjective "cheap" there? That's because Recto himself authored the very same bill that actually put a huge burden on EVERYONE (even the under- and non-employed) that even the token action of lessening the tax on the Christmas bonus can't compensate for: the E-VAT law.

That's a tax on previously VAT-exempt goods and services (hello gas) that companies are happy to pass on down to consumers in the form of increased prices, which the law as written leaves it up to companies to shoulder the cost themselves or pass it on to consumers ("The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services."). I have never heard of any company that willingly shouldered the extra cost themselves, have you?

So aside from inflation, people have to deal with the repercussions of the VAT levied on oil products, which is basically higher cost of goods since retailers have to factor in transport costs in their selling prices.

Sen. Ed Angara chimes in:

"Ang bigat na ng pasan ng mamamayang Pilipino. Sabay-sabay ang pagtaas ng presyo. Hinahanap natin kung ano ang maibabalik ng lipunan sa kanila, whether in the form of better services o mas babaan ang kanilang buwis na hindi naman mapeperwisyo ang ating ekonomiya." (Filipinos are already heavily-burdened. The increase in prices have all come simultaneously [fuel, water, and electricity prices will all go up this month]. We're trying to find some way for the government to be able to give back to them, whether in the form of better services or lowering taxes that won't harm our economy.)

The operative clause there is "that won't harm our economy". Of course.

So they're essentially wanting to make it seem like they care but not by doing concrete actions that would have better, far-reaching benefits (i.e. scrapping the E-VAT law altogether, but at a considerable hit on tax collections). I'm not even sure that the underemployed (i.e. works less than 40 hours, ergo non-regular employees) which comprise 62.4% (!) of the working force would even benefit from the proposed law, as their employees aren't legally mandated to give them 13th month pay.

Politicians, raising exemptions on Christmas bonuses (it's not even a full exemption, geez) is child's play. Want to really make a difference? Remove the E-VAT altogether. And try to nationalize some utilities while you're at it - utility oligopolies are severely bleeding Filipinos dry. Show us you really care, and not just every 3 years when you need our votes.

P.S. BIR Commissioner Kim Henares crying foul because she won't be able to meet tax collection targets is off-putting, to say the least. I understand that it's her job to meet collection targets, but it sounds crass to rant and moan about not meeting targets when the government can't track down/don't even have much to show for all the billions of tax dollars it has been pissing away for years already nor has it ever amounted to improved lives for all of us.