LETTER TO THE EDITOR

10 January 2005

NO TO A VAT RATE INCREASE

I am strongly against an increase in the value added tax (VAT) rate.  VAT is an indirect tax that does not distinguish between the rich and the poor.  Any increase in its rate would burden more those can no longer bear them.  I am talking about the poor.

I am saddened that we hasten to increase the VAT rate while maintaining the exemptions on sectors like doctors, lawyers and even pseudo-cooperatives which use the cooperative as a cover to evade paying VAT.

I am also saddened that we maintain not just exemptions but even zero-rated application of VAT on independent power producers, thereby not just exempting them from VAT but even subsidizing their operations.

I feel that it is highly irresponsible for us to unjustly increase the VAT rate without looking at where the leakages from its collection come from.  I understand that the actual collections from VAT is only about 50% of the potential revenues that it is collecting. Where do those leaks come from?

If only the leaks are plugged, there might not be any need to raise the VAT rate. 

Let us stop punishing the poor.  They have suffered and they continue to suffer.    Let us use Congress’ taxing powers to protect the poor and put the burden on those who can take it.  Increasing the VAT rate is definitely not the way to do it.

                             (signed)

LORENZO R. TANADA III