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Wednesday, March 02, 2005
Lawyers, docs in new House value-added tax
CEBU CITY -- After prodding from President Arroyo, the House of Representatives approved late Monday night a bill that removed value-added tax (VAT) exemptions on some goods and services and cut VAT rates on certain items from 10 to six percent.
Lawyers and doctors will have to pay VAT under House Bill 3705.
Speaker Jose de Venecia said the bill provides for the "best possible safety nets for socially sensitive goods and services" while ensuring maximum new revenues for by the revision of the current VAT exemptions.
But Representative Antonio Cuenco (Cebu City, south) does not see it that way. He voted against the bill, saying his "conscience" drove him to do so.
HB 3705 was passed with a 156 to 30 vote. Four Cebuano legislators voted for the measure, while two were absent when the voting was called about 11 p.m. Monday.
Cuenco said the measure did not give assurance that the consumers will not bear the burden of the lifting of the tax exemptions given to doctors and lawyers.
"There was no assurance that they would not pass this on to consumers. I just hope it will work. Lisud kaayo. Alaut ang mga kabus (The poor are at a disadvantage)," he said.
The legislators also passed last January HB 3555, which raised the VAT from 10 to 12 percent. Both bills will be reconciled with the Senate version.
Speaker de Venecia said the lifting of VAT exemptions and the expanded VAT, which was earlier approved by the House, would help address the budget deficit and achieve a balanced budget two years ahead of the 2010 target.
"With the passage of the revision of the VAT exemption list and upgrading the standard VAT to 12 percent, the government will exceed its target of P80 billion in new revenues and put our fiscal house in order," de Venecia said.
The approval of HB 3705 came after the President urged Congress to act immediately on the VAT bill to address the government's budget deficit and debt problems.
In voting for the HB 3705, Representative Raul del Mar (Cebu City, north), said the consumers are protected by the "no shifting provision" wherein the VAT is "borne and absorbed exclusively by the power-generating companies or by the sellers of petroleum products."
For his part, Cuenco admitted that Cebu Archbishop Ricardo Cardinal Vidal's stand against VAT "weighed heavily" but the opinion of his constituents also influenced his decision.
He talked with local anti-VAT groups, like the VAT Oppositors in Cebu (Vatoc) and Katawhan Batok sa VAT Increase (komVATI).
Souie Mercado, spokesperson of The Association of Concerned Commuters and Consumers (AC3), described the approval of the four-tiered VAT bill as lawmakers' "grave abuse of authority."
"Like thieves in the night, our lawmakers acted on VAT bill while the people were in deep slumber. It's a grave abuse of power and confidence," Mercado said.
Mercado also urged the public, especially the consumers, to be vigilant and fight for their rights, saying: "Let's not leave our future in the hands of politicians."
Instead of imposing new tax measures, Mercado called for an honest-to-goodness collection of taxes and the elimination of graft and corruption in the bureaucracy.
For his part, Ritchie Nellas of komVATI, said they will study further the lifting of the VAT exemptions on some basic goods and services.
But he believes the ordinary folk will suffer the brunt.
"It is expected that they will pass it on to the consumers," he said, adding that this is a repressive form of taxation.
Cuenco said he did not bother completing the session and left immediately after he cast his vote.
"I went home and slept soundly. If I had voted 'yes', I think I would have trouble sleeping," he told Sun.Star Cebu Tuesday.
Under House Bill 3705, only "pan de sal" and liquefied petroleum gas will be exempted from VAT.
Power generation and petroleum products will be subject to a four percent VAT but it will increase annually for four years.
Local processed goods such as mackerel, sardines, sugar, noodles, milk and cooking oil will be slapped with a six percent tax.
A 12 percent VAT will apply to professional service fees of doctors and lawyers and on the importation of passenger and cargo vessels weighing not more than 5,000 tons.
The government expects to raise at least P50 billion with a 70 percent collection of the VAT on the said goods and services.
Opposition legislators also vowed to continue the fight in the streets.
Bayan Muna party-list Representative Teddy Casio, who voted against HB 3705, said nothing will prevent power and oil companies from passing on the tax to their consumers.
Casiño said provisions in the bill, introducing price controls and the nullification of contrary provisions in the independent power producers (IPP) contracts, are not enough to prevent oil companies and power producers from increasing the prices of their goods and services.
"I still fear that a few months from now, I will find myself telling the congressmen who voted for the VAT bill, I told you so," he said, referring to his disagreement that the law's no-pass on prohibition will work.
Meanwhile, Senate Majority Leader Francisco Pangilinan said the Senate would probably conduct morning and afternoon sessions in order to expedite the passage of the VAT bill.
Senate President Franklin Drilon urged his colleagues to work double time on the bill so that it can be passed before Congress goes on a Lenten break. (Sunnex/CYR/GC)
(March 2, 2005 issue)
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