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Arroyo stands pat on VAT

Says tax will enable RP to weather global crisis

By Christine Avendańo, Michael Lim Ubac, Norman Bordadora
Philippine Daily Inquirer
First Posted 01:24:00 07/29/2008

Filed Under: State of the Nation Address (SONA), Congress

MANILA, Philippines?As thousands of protesters burned her in effigy, President Gloria Macapagal-Arroyo Monday spurned calls for the scrapping of the hugely unpopular value-added tax (VAT) on oil, declaring there was no turning back on fiscal reforms that she said were bringing in billions of pesos in revenues.

To abolish the 12-percent VAT would be to endanger the country?s economic future, Ms Arroyo said in her eighth State of the Nation Address (SONA) before Congress.

In a fuschia-colored Maria Clara gown, Ms Arroyo said the revenues from VAT would help the Philippines weather what she described as a ?terrible tsunami? of global economic uncertainty.

?For the guts not to flinch in the face of tough choices, I thank God,? she told the joint chambers of Congress. ?For the wisdom to recognize how needed you are, I thank you, Congress. For footing the bill, I thank the taxpayers.?

Apparently adverting to a recent survey showing her to be the most unpopular leader the country has had since 1986, Ms Arroyo conceded her fiscal policy had brought ?more unpopularity for myself in the opinion polls.?

But digging in, she said: ?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.?

Church groups, as well as some senators, congressmen, consumer organizations and militants want VAT scrapped, saying it has become an extra burden for poor Filipinos.

Businessmen, however, welcome VAT?s retention to keep the economy in shape.

In her 58-minute speech interrupted 104 times with applause from her allies in Congress, Ms Arroyo supported the natural family planning method espoused by the Catholic Church in curbing population growth.

She also called on Congress to enact measures needed to achieve peace with Moro separatist rebels in the Mindanao.

Texting costs cut

And as if to woo more people to her side, Ms Arroyo said she recognized that text messaging had become a ?way of life? in the country and announced that telecommunication firms had heeded her request to bring down the costs of text messaging by half, at least between telecommunication networks.

But it was in defense of the VAT that she reserved some of her strongest statements.

?Take away the VAT and you and I abdicate our responsibility as leaders and pull the rug from under our present and future progress, which may be compromised by the global crisis,? she said.

?Take away the VAT and we strip our people of the means to ride out the world food and energy crisis.?

Ms Arroyo said the VAT would help reduce foreign debt, help achieve fiscal independence for the country, and provide more investments as well as enough funding for pro-poor programs.

She said the tax measure also spurred investor confidence, citing how it helped strengthen the peso against the dollar.

P8 billion from VAT

It will be the poor who will suffer the most from the removal of the VAT on oil and electricity as this will mean the loss of P80 billion in programs being funded by VAT, Ms Arroyo claimed.

She cited the P8-billion fund from the VAT windfall that she had released or earmarked to help people cope with skyrocketing prices of commodities.

These included the P2 billion released as power subsidy for four million lifeline users, P1 billion in scholarship and school loans for 70,000 poor students, P500 million in loans to help jeepney, bus and taxi drivers convert diesel engines of their vehicles to the more economical LPG and CNG, and another P500 million to install fluorescent lamps in public places.

Another P4 billion will be released to continue providing power subsidy for lifeline users in the amount of P1 billion; P500 million to help poor senior citizens without pensions; another P500 million as capital for families in the public transport sector; and another half billion pesos to upgrade hospitals and their equipment.

Legislative agenda

Ms Arroyo set out her legislative agenda for her remaining 23 months in office. She called on Congress to:

? Ease the near-term pain while investing in long-term solutions such as infrastructure development, new irrigation systems, support rice self-sufficiency program and subsidies for the poorest of the poor.

? Extend the Comprehensive Agrarian Reform Program ?with reforms.?

?I want the rackets out of agrarian reform,? she declared.

She said agrarian reform ?should not merely subdivide the misery of the land, it must raise the living standards of those who work the land ? We don?t want that a tenant who is freed from his landlord will be placed under (the mercy of) usurers.?

? Pass the bill allowing the Social Security System to provide housing loans beyond the present 10-percent limitation (or abolish the law which limits SSS to utilize only 10 percent of its funds for loans).

? For the Senate to pass the Renewable Energy Bill to achieve energy self-sufficiency.

? Pass the Consumer Bill of Rights to protect consumers from price gouging, false advertising and other marketing malpractices.

? Enact a tougher Anti-Graft Act

? Amend the Electric Power Industry Reform Act.

A nation in crisis

Citing the worsening ?global economy,? Ms Arroyo said she was governing a nation in ?crisis.?

?I say this is a global crisis where everyone is a victim,? she said.

She dubbed the global economic crisis as the ?worst since the Great Depression and end of World War II.?

Apparently reaching out to her detractors in the opposition-dominated Senate, Ms Arroyo said: ?We are three branches but one government. We have disagreements ? but we are one nation with one fate.?

Cheers for Rodney

Receiving the second biggest applause?next to Ms Arroyo?s announcement of a 50-percent cut in text messaging cost?was 13-year-old Rodney Berdin of Barangay Rombang, Belison, Antique.

Berdin and his mother wore what may be their best clothes but still they didn?t come close to the elegance around them.

The timid teen, nonetheless, received massive cheers from the predominantly wealthy and middle-class gallery when Ms Arroyo said he had saved his mother, brother and sister from drowning in the bloated waters of Sibalom River at the height of Typhoon ?Frank? (international codename: Fengshen) in the Visayas.

?He didn?t get that much education but he knew what he should do in the situation?save his family from the river,? said Director Rosie Cabrera of the Office of Civil Defense in Central Visayas.

Applause for Victoria, Alan

Cabrera accompanied Berdin and his mother to the refurbished House to be presented by Ms Arroyo.

A group of businessmen in the gallery also applauded Victoria Mindoro who Ms Arroyo said used to earn P5,000 a month as a farmer and factory worker but now earns P10,000 a week as a beneficiary of an agrarian reform community in Kabasalan town in Zamboanga Sibugay province.

They also cheered Alan Almanse?40-year-old college undergraduate and father of two?who used to earn P100 a day from fishing and driving a tricycle. As a whale shark officer under the government?s tourism program, he is now earning P1,000 a day, 10 times his previous income.

?Many Filipinos are highly skilled. [What is needed is] just guiding them to the right direction, giving them the confidence and giving them the necessary tools,? said entrepreneurship advocate Joey Concepcion, who was also in the gallery.

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