‘Spice Boys’ oppose VAT, excise tax hike

Members of the "Spice Boys" in the House of Representatives asked their colleagues yesterday to oppose an International Monetary Fund-recommended increase in the value added tax and excise tax.

The call is contained in a resolution authored by Lakas Representatives Juan Miguel Zubiri of Bukidnon, Robert Ace Barbers of Surigao del Norte and Rolando Andaya Jr. of Camarines Sur.

The three said the House and the Senate should reject the IMF recommendation for increasing the value added tax (VAT) from 10 percent to 11 percent, and the excise tax by 21 percent.

They said if the IMF recommendation is adopted, there would be a corresponding increase in the prices of consumer products and services since these are covered by VAT and excise tax.

They cited gasoline and other oil products, from which the government collects billions in excise taxes yearly.

They said if the IMF prescription is followed, the prices of gasoline, diesel, kerosene, and other petroleum products would go up by 21 percent.

Minority Leader Carlos Padilla (LDP, Nueva Vizcaya) supported the call of the three Spice Boys members.

Padilla said the government should raise additional revenues by improving its collection efficiency and reducing graft and corruption, not by increasing the tax rates as recommended by the IMF.

He said the people are already overtaxed since they are subjected to both direct and indirect taxation.

The administration can also save money and at the same time generate additional income by strictly enforcing its austerity policy, Padilla said.

He recalled that President Arroyo, in an administrative order, directed Cabinet members to surrender to the Bureau of Customs all government-owned luxury cars so these can be auctioned.

As of the last report of Customs, only the 50 or so sport utility vehicles seized during the previous administration have been sold, said the opposition leader.

The IMF wants the government to increase its tax rates so it can raise billions that it would in turn allocate for debt payments to local and foreign lenders, he said.

The IMF recommendation is apparently intended to narrow the soaring budget deficit which is projected to reach P145 billion this year and P130 billion next year.

The Arroyo administration is partly following the Fund’s prescription since it plans to increase the excise tax rates on cigarettes, beer, liquor, and other tobacco and alcohol products.

In fact, its P624-billion revenue target next year already includes an additional P5 billion in excise tax collections from the so-called "sin" products.