By Jon Lamb
President Ramos of the Philippines looks set to push through the implementation of RA7716, the Expanded Value Added Tax Law, by the end of October. Progressive and left organisations are stepping up activities in opposition to the VAT, which will dramatically affect urban poor, workers, farmers and sections of business.
A temporary restraining order was taken out by anti-VAT activists on June 30 to halt the introduction of RA7716. The Supreme Court on August 25 refused to make it permanent, but has not as yet lifted the restraining order. This has drawn it into conflict with solicitor general Raul Goco, who filed a motion with the tribunal stating that the Bureau of Internal Revenue would collect the VAT from October 1, even with the restraining order still in place.
Progressive legal groups are petitioning the Supreme Council to hold new public hearings on the new tax, which will add to the VAT introduced in 1988 by Aquino.
The opposition has formed campaign groups such as KOMVAT and Kill VAT. Both have organised demonstrations in recent months to pressure Ramos and Congress not to allow the passage of RA7716.
Congress has been "rewarded" by the executive for permitting the VAT to pass, with the release of country wide development funds — used by incumbents in their electorates for local projects, to boost their popularity prior to elections next May. These elections will involve half the Senate and all of Congress, as well as provincial governors, municipal and government positions.
The VAT will affect those who can least afford it. The price of basic goods is expected to rise by 2% to 6%. For the average worker, with an "official" wage of around 3100 pesos (US$100) per month, it will represent a tax hike of at least 12%. The price of food is expected to skyrocket due to the effect of VAT on transport, pesticides and insecticides. Small farmers and cooperatives will in turn suffer, unable to pass on this burden to traders and millers.
There will also be a 1000 peso yearly fee for business, regardless of size. VAT on medical, dental, hospital and veterinary services will be phased in within two years. The price of books, newspapers and magazines is also expected to rise with increased printing costs.
Green Left Weekly spoke to Maria Diokno, secretary general of the Free Legal Assistance Group (FLAG), a human rights and legal aid NGO involved in the anti-VAT campaign.
"Why should the poor be taxed at all when 70 billion pesos in corporate and individual taxes are not being collected? Tax evasion is as high as 40% to 45%. The Bureau of Internal Revenue will have huge problems in monitoring the new VAT", Diokno said.
"Even one of the government think-tanks admitted that only one third of the VAT introduced in 1988 has been collected. And then there are the millions lost through graft and corruption. I don't know how the government thinks it is going to carry out the new VAT."
The Ramos government is projecting raising 8 billion pesos annually, through taxing those who are already over-exploited. A report published in the Manila Bulletin stated that the new VAT will take away 5.5% of the total incomes of the poorest families and only 3.7% from the total income of the richest.
FLAG has just launched Kilusang Repeal VAT (KRV) — People's Movement for Repeal of VAT. "Under Philippines constitutional law, there exists a provision to directly oppose or amend part of the constitution", Diokno explained. "To do so, 10% of all registered voters must sign a petition stating their opposition or amendment. The signatures must cover all 200 legislative districts and include at least 3% of the registered voters in each district. This will be a significant attempt at participatory democracy."
KRV signature stations are being set up in all local districts, with 117 legislative districts confirmed so far. KRV has been launched in six provinces — with more to follow — and the collection of signatures has already begun. The four weekends of November have been designated KRV National Weekends of Action to collect as many signatures as possible. KRV is also organising demonstrations to build support for the petition campaign, such as the protest of 3000 people on September 24 outside municipal buildings in the Malabon district of Manila.
If enough signatures are collected, the National Commission of Elections must publish the results nationally and call a referendum on the repeal of the new VAT law. A simple majority is all that is then required for the KRV to be successful.
While it's a drawn-out process, Diokno is optimistic about the outcome. "This is one mechanism to involve people in the decision making process and to raise their political awareness."
[Messages of support for the campaign can be sent to KRV, 204 Caberra 11 Building, 64 Timog Avenue, Quezon City. Tel: 924 3799/965 477 Fax: (63-2) 817 5410]