Q: The Philippine government is standing by its policy to keep the VAT amid surging inflation partially brought about by the global financial crunch, despite more popular calls to scrap it.
A: I don't think it would be wise to scrap the VAT. Sometimes good governance has to take drastic and painful decisions for the betterment of the welfare of the people. In our case, scrapping or not scrapping of VAT is not the main solution, it is the collection and the enformcement of our tax laws which the government should take a closer and serious look. No matter how good a tax law is (at least on paper), if the enforcement is terrible, then it would be as good as a scrap of paper. I think the better way to do is to lower the VAT, not totally scrap it. And increase the VAT and excise taxes on cigarrettes, alcohols and the like. It will not only discourage people from smoking and/or drinking because of the high cost, it will only encourage people to have a healthy living and somehow help the government reduce whatever healthcare spending it is incurring in smoking/drinking related-diseases. But to totally scrap VAT, i think, is out of the equation. Government is trying to ( at least) aleviate the condition of the plight of our people. Government can only do so much. We can also do our share. We can always change the way we live and accomodate to the tough economic conditions we are in. We can always save. Problem with government is that it institute "band-aid" reforms and not looking at prosepectively. Savings from VAT are being unwisely spent for "immediate" relief and not creating reforms and programs for long term solutions. Also, the negative image this administration has, effectively tainted its honest-to-goodness intention to utilize VAT savings for the welfare of the poor and people have this notion than it will just end up in their pockets. Too bad..