VAT

I watched parts of Gloria's State of the Nation address yesterday and I agree with her on the issue of retaining the VAT. She said VAT collections go a long way in funding social services and creating job opportunities. OK, ok, that was of course meant for a broad audience, and so the motherhood statements that ring hollow.

Removing the VAT can have dire consequences for the country. I hope those militant groups who engage in drama and empty rhetoric realize that. Let's analyze this one properly without getting too worked up or emotional, shall we?

VAT collections account for a huge chunk of government revenues. Removing this means we're back to huge budget deficit days. Incurring huge budget deficits in turn means lower credit ratings, thus higher interest rates on existing and prospective sovereign loans, loss of investor confidence resulting in a weak currency and inflation, putting pressure on the already-high gas and commodity prices on account of global supply constraints.

In order for investments and capital to flow smoothly into the country, the country must show a strong revenue base consisting of direct and indirect taxation (VAT, customs duties, etc.), as well as a determined tax revenue collection effort (as a % of GDP, we lag behind our ASEAN neighbors).

By the way, why do IBON Foundation surveys get noticed by media? Are you kidding me, that blasted NGO's surveys use the most biased and the most unscientific methodology in the country. Ridiculous results! Huwag na kasi patulan, lumalaki lang ulo ng mga yan!