A Case of Wrong Timing

The benchmark agendum in the platform of incumbent-President Noynoy Aquino’s government is the noble promise not to impose any new taxes amongst the cash-strapped Filipinos. Taxes are the lifeblood of a government, a huge chunk of their spending power relies on their income from taxes. In the Arroyo era, then-President Gloria Arroyo risked the wrath of the public in order to impose the Value Added Tax (VAT) and  then the Expanded VAT (EVAT).

Though taxes may reduce the amount of income one can spend on his family, we must understand that they are essential. Taxes are vital to improve infrastructure and government services that in turn may define the nation’s economy and the standard of living of the people. However, it is also important for taxes to be reasonable and within the boundaries of affordability. It is true that citizens need to comply with their duties, but governments need to be humane in imposing them as well.

The South Luzon Express Way will be among the toll fee roads affected by the VAT.

At the onset of the recent ‘Saudization’ issue – the limiting of foreign workers by Saudi Arabia in their country – as much as 500,000 Overseas Filipino Workers are set to lose their jobs. Around 50,000 workers have already received their termination papers. This means that the number of Filipinos who are seeking employment, both locally and abroad, has increased. Almost at the same time as this problem, the Aquino administration decided to impose the 12% VAT on toll road fees, a provision never imposed in the original VAT law.

Talk about wrong timing. The tax, although the government argues is based on toll receipts and not on the consumers’ spending, will increase toll fees which in turn will be an added cost to the numerous trucking companies that transport goods to the markets. The increase in costs will be compensated through an increase in the price of the goods affected, which in turn will lead to a domino effect of price increase on all goods interconnected. This will be an added headache, not only to the consumers, but to export markets as well.

Such is the case with cement companies in our country. The industry is struggling to export their goods, since Philippine-made cement is the 2nd most expensive in South East Asia. Among their reasons of setting such high prices is the expensive trucking costs in the country – just think of what the increased toll fees will do. It will make it harder for our local export markets to compete internationally.

Let us not get the Aquino administration wrong, they aim for nothing but to improve government social services. The revenues the government expects to collect amounts to nearly Php2B, a boost to their dry coffers. However, more should be expected from an economics graduate like Noynoy Aquino. Any cash handout given to struggling households will be useless if prices continue to increase. The Aquino administration should instead invest in infrastructure and in new factories that would control or even lower the prices of commodities in the country. Toll roads should be bought and their toll fees erased instead of increasing them. This will be a better, long-term, response to poverty and an appropriate means to alleviate the plight of the unemployed.

On the 30th of June 2010, Benigno “Noynoy” Aquino III, only son of our nation’s most recognizable figures, vow not to further the misery of the poor by not imposing new taxes.  While it is understandable if PNoy may break this promise, he should also learn to adjust his reforms according to the situation in the country. Adding taxes at a time when OFWs are losing their jobs and unemployment is high is an insult to injury, an insult on the plight of destitute Filipinos. If there is a need for stronger financial support from citizens, the government should at least be considerate of other economic factors in the country as well. If we are to practice good citizenry, the government should also practice proper timing.

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