1362 B from substitute measures can offset loss from VAT suspension – Imee

Ilocos Norte Governor Imee Marcos, after earlier calling for a one-year suspension of the ValueAdded Tax (VAT) to address rising inflation, on Friday suggested substitute measures to offset the expected multi-billion peso revenue loss.

“A combination of 10 percent improvement in income tax collection, higher absorptive capacity or much less agency under-spending, and three other measures can generate 1362 billion in revenues. That would replace the VAT that would be missed,” said Marcos, who is seeking a berth in the 24-member Senate through the coming May, 2019, mid-term elections.

She cited Bureau of Internal Revenues (BIR) figures showing that if income tax collections grow by just 10 percent, the government could earn at least 1102 billion in 2018 and 1113 billion in 2019.

“I have confidence in the leadership and persuasive powers of Finance Secretary Carlos Dominguez over the BIR and other revenue agencies. I am not asking for the impossible. Having been a governor and congresswoman, I am very aware of what can be done as regards tax administration and collection,” she said.

According to the Department of Finance (DOF), basic food items such as rice, fish, meat and vegetables have been major drivers of inflation this year, with the contribution of rice alone rising 10 times to one percentage point of the inflation rate.

Data from the Philippine Statistics Agency (PSA) showed that rice was the number one contributor to the 6.7 percent inflation rate in September, 2018, and that food items in the consumption basket accounted for more than half of the inflation rate in the same month.

“Filipinos cannot wait for global oil prices to go down. Prices are already too high for Filipinos living below the poverty line. Removing the VAT would lighten the burden on millions of Filipino households,” Marcos said.

“The VAT suspension will run parallel to the anti-inflation measures of the Duterte economic team and BangkoSentralngPilipinas (BSP). It will buy time for the recovery and expansion of the agricultural sector. Filipinos, most especially the poor, will be clear-cut winners if we can suspend VAT for a year as this will bring down the prices of food, fuel and electricity,” the governor added.

Marcos said the temporary lifting of the VAT on basic commodities would provide urgent and much-needed relief to Filipinos as the countryside has been hit hardest by the rising inflation.

“The poor Filipinos cannot wait for anti-inflation strategies that could take months to work. They need solutions now,” Marcos stressed.

The high inflation rate was ascribed to the controversial Tax Reform of Acceleration and Inclusion (TRAIN) 1 Law that took effect this year.

Marcos said that while President Duterte could not amend the TRAIN 1 Law, he could suspend its implementation through an Executive Order.

Marcos, who served as legislator for nine years in the House of Representatives representing the Second District of Ilocos Norte from 1998 to 2007, said her province was the hardest hit by the skyrocketing inflation, thus making it hard for her constituents to make ends meet due to high prices of basic commodities.