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Friday, October 28, 2005
Lee: The coming of expanded VAT
By Kelvin King Lee
Babble On
"...in this particular democracy, with the EVAT looming, businesses about to collapse and prices about to shoot sky high, none of us are going to win at all. We may all be losers here."
E-VAT is coming, and there may be nothing to stop it.
When Congress passed Republic Act 9337, essentially the Expanded Value-Added Tax Law of 2005, there were already legal experts who questioned its constitutionality.
That was the gist of the five petitions filed against the E-VAT law with the Supreme Court. All five petitions were attempting to attack the very legality of the way Congress passed the law and the provisions of the law itself. It took a bicameral committee, made up of both congressmen and senators, to place various amendments, like the one with regard to "stand-by authority" of the President to raise the VAT rate to 12%.
This was questioned because this committee is supposed to act only if the House of Representatives version of a bill and the Senate's version of a bill are materially different. The petitions claim that the committee acted as a third chamber of congress when it made changes to the law.
However, the Supreme Court basically upheld the legality of the E-VAT law.
I asked Capiz lawyer and Ateneo Law Professor Toto Villareal about this and he explained that it takes 8 votes of the Supreme Court to declare a law as unconstitutional. Atty. Villareal, who was lead counsel for the minority and party-list congressmen who petitioned against the E-VAT, further explained that many members of the Supreme Court saw the validity of their legal arguments.
Nine justices submitted separate opinions on varying parts of the law. It was just too bad that they did not get the needed votes to declare the law itself unconstitutional.
So I believe that, in essence then, the E-VAT law was declared constitutional and legal because there WERE NOT enough votes to declare it otherwise.
The effects of the E-VAT law will be felt on November 1, when it is supposed to be implemented by the government, presuming the Implementing Rules and Regulations (IRR) are finished and published by then.
There is still a great deal of confusion and fear as to its implementation. Businesspeople, in particular, are worried about E-VAT.
Tabby Soriano, a Manila-based entrepreneur, did the E-VAT math for their family business and had to tell her mother that they couldn't make a profit anymore, unless they really increase their margin. Dorothy Bangayan, who is a Cebu Pacific-Summit World manager, believed that E-VAT would be bad for the small to medium businesses which can barely make ends meet under the current business environment. She believes that the government, by passing the E-VAT, is not looking after the welfare of businesses, which will bear the brunt of the EVAT and must raise prices just to survive. Bangayan, who is also a travel industry expert, has already heard from various small travel agency owners that will close shop once E-VAT is implemented.
Eric Leon, a computer sales manager, agrees and opines that there will be many businesses closing up in the next few months after E-VAT's implementation. Wendy Pua, Bench marketing manager, thinks that many small enterprises will be driven out of business and that very few new businesses will even think about opening. She also believes that in the end, it is the consumer who will suffer the most, with the raised prices of goods.
Attorney Villareal explained that when the economy is down, revenues of business are down as well. So if revenues are small, then nobody will want to buy, which will have adverse effects on the economy. He believes that the E-VAT is not good for a transitional economy like that of the Philippines.
When I asked Attorney Villareal if there were still any legal avenues to stop E-VAT, he told me that the entire legal process has been exhausted, and that save for Congress repealing the law, or perhaps the President changing her mind, there is nothing to stop E-VAT's implementation on Nov. 1, 2005. He believes that since the Supreme Court has ruled on the matter already, we must respect its decision and the decision of our government institutions in passing the law.
Although the petition was unable to stop the E-VAT law, Atty. Villareal and his clients, led by Minority Leader Francis G. Escudero, were able to "give" the Filipino people a "reprieve" from E-VAT in the form of the Supreme Court's Temporary Restraining Order, which halted the E-VAT's implementation for a few months. Attorney Villareal reminded me that we live in a republican democracy, after all, and you can't win them all.
He is right about that. The problem though, in my opinion, is that in this particular democracy, with the E-VAT looming, businesses about to collapse and prices about to shoot sky high, none of us are going to win at all. We may all be losers here.
Email me at babbleoncolumn@yahoo.com
For Bisaya stories from Davao. Click here. (October 28, 2005 issue)
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