Higher Vat: Best Solution or Worst Problem?

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“VAT” is a business tax imposed by the government on business establishments. Since this is an indirect tax, establishments are allowed to pass on the burden to their consumers,” said Coleen Laureano, accounting instructor. Laureano, however, emphasized that VAT is for non-essential goods or items only and that it should not be charged on things that are essential for man’s existence.

President Gloria Macapagal Arroyo emphasized that the country is not suffering from economic crisis, not even from political crisis but from fiscal crisis, which is the root cause of poverty and misleads of the Filipinos. In this regard, she strictly imposed an increase in the Value Added Tax (VAT) from 10 percent to 12 percent as the best solution to the problem. This is indeed a new challenge for Filipino people particularly the poor who are already living in hunger for them to struggle.

Grievances coming from different sectors of the society were hoisted after the declaration of higher VAT implementation. Some were in favor, but majority lamented.

In response to the protests, Malacañang pushed for the exemption of food items such as sardines, bread and instant noodles that are widely consumed by the public and are considered as the prime commodities. In addition, legislators have proposed to boost the VAT exemption on services rendered by doctors and lawyers, electric patrons and independent power producers.

The eLIT interviewed some students and faculty members regarding their views on VAT.

Rachel C. Esperancilla – 2nd year nursing student stated, “Yes, I’m in favor of VAT because if there is no VAT, where are we going to get the budget for our public teachers? How are we going to build new schools and buildings?” She even said that VAT is a big help for our government. “It’s a little way of helping our government and our poor countrymen”, she added. Esperancilla viewed VAT as a deduction from a private and public employee’s salary, which will be allotted for the projects and programs of our government.

Ms. Laureano, on the other hand, said that VAT doesn’t increase the burden of those who are below the poverty line because for basic food items like rice, fish, vegetables, etc., VAT is not added. VAT is actually added to those things that we can consider luxury item – things or foods that we but not because they are necessary in our daily living but because they provide comfort and personal satisfaction.

Moreover, Laureano stressed, “I think 10% VAT is enough to sustain the government and to support President GMA’s plans if only the administration has a stricter policy of collecting taxes.”

Likewise, Engr. Anna S. Dioneda – IE Faculty emphasized, “I am not in favor of VAT because this serves as additional burden on the part of consumers due to economic crisis.” Dioneda believes that for any service rendered, the consumers will have to pay an extra amount classified as service tax.

“Instead of claiming VAT from consumers, the government should concentrate on developing projects that will uplift the lives of the poor,” Dioneda clarified.

Engr. Orlando Perez, School of Engineering chairperson, pointed out that the country’s financial crisis couldn’t be solved by increasing VAT but by other means like eradicating graft and corruption and strengthening Filipino moral values.

Laureano stressed that the government should have a better tax collection procedure, proper implementation of stricter tax policy and punishments for those who are evading taxes.

These are just few reactions of some LIT constituents eLIT interviewed. Now that the issue confronts us, is higher VAT the best solution or worst problem?

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