The administration’s “Katas ng VAT” is a pretense to cover up how the largest
part of reformed value-added tax (RVAT) revenues do not go to social programs
but rather to paying off debt, militarism and political patronage to prop up
President Gloria Arroyo’s unprecedented unpopular rule.
The so-called pro-poor subsidies also do not mean any lasting effect for the
people who suffer record joblessness, rising prices and worsening poverty.
The government deceitfully lumps together the share of social services with
infrastructure in RVAT revenues when it reports on the share going to social
programs to make these appear larger than the reality. The government claims
that 40 percent of RVAT revenues in 2008 will go to “social services and
infrastructure” but it is still unclear how much will really go to social
programs.
For instance the Department of Finance said that, in 2006, “30 percent or P23.5
billion (of additional RVAT revenues) went to social and infrastructure
expenditures”.
However the actual amount that went to social services was just P8.4 billion:
health programs (P2.7 B), resettlement and housing programs (P2 B), educational
& training programs (P1.9 B), hunger mitigation programs (P1.8 B).
This means that only 11 percent of additional revenues from RVAT went to social
programs.
The administration’s lack of concern for social programs is even underscored by
how it is not even using the whole amount of windfall RVAT revenues due to high
oil prices for supposedly “pro-poor” programs.
Based on the administration’s announcements on the “Katas ng VAT” so far, only
P9.3 billion or just half of the estimated P18.6 billion in windfall RVAT
revenues is going to subsidies. This leaves another P9.3 billion unaccounted for
inasmuch as another P2 billion in “subsidies” that had been hyped are merely
loans that still have to be repaid.
Indeed, the administration has yet to fully explain where its massive windfall
RVAT revenues are going which can only stoke suspicions that this is going to
corruption and building a political war-chest for the 2010 elections or even a
renewed Cha-Cha campaign.
In contrast the administration still insists, in the face of the people’s
worsening problems, on allotting some 24 percent of the national budget to
interest payments on debt. The government is paying P634 billion in total debt
service in 2008 covering interest and principal payments.
President Arroyo also said earlier this month that the government is using RVAT
revenues to “finance much of (the military’s) modernization” and that it “has
been able to set aside billions of pesos for the purchase of new helicopters”.
The Capability Upgrade Program (CUP) of the Armed Forces of the Philippines (AFP)
alone already has P5 billion allotted for it this year even as the economic
plight of the people is more urgent.
The Arroyo government is running out of excuses to justify the continued
imposition of the VAT on socially sensitive products such as oil.
President Arroyo has to heed to the people’s clamor to remove the VAT if she
wants to reverse the perception that her SONA speeches is a simply a litany of
meaningless promises.
(Statement from IBON, an independent development institution established in
1978 that provides research, education, publications, information work and
advocacy support on socioeconomic issues)
