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The stand of Finance Secretary Carlos G. Dominguez III against increasing the Value-Added Tax (VAT) rate from the current 12 percent to 14 percent is admirable not only because it is pro-consumers but also because it reflects the kind of government that we have now.
The proposal to increase the VAT rate was made as an option for the government to raise that needed tax revenues as the promise of President Rodrigo R. Duterte to lower personal and corporate income tax rates is expected lower tax collection.
Increase the rate of one tax type to compensate for the effects of decreasing the rate of another tax type is a convenient action for the government. The public may still be happy with a higher VAT rate when personal income tax rates are decreased because the same will mean higher net gain for the public as most of the basic necessities are non-vatable.
The Department of Finance (DOF) estimated that a two-percentage point increase in the VAT rate will translate to an R82-billion revenues for the government.
Instead of favoring the “easy” option of increasing the VAT rate, Secretary Dominguez is opting to pursue a difficult option – the government earning more from VAT by improving its collection performance.
Taking the said option is very much government-like.
The government exists to serve and protect the people. Clearly, Secretary Dominguez does not see increasing the VAT rate as the necessary way of serving the Filipino people. His stand clearly speaks of serving the people through better performance of the government. In fact, according to Secretary Dominguez, the government can double its VAT collections by being more efficient in collecting it.
Secretary Dominguez’ kind of leadership and service is what we need in all agencies and branches of our government.
It is a leadership that is defined by the ownership of the responsibility to serve and protect the people not by resorting to what is convenient but pursuing what is best for those being served and protected.
The position of Finance Secretary Dominguez on the proposed VAT rate increase reflects the change that we can expect from the Duterte Administration. A “changed” government is key to the change that we all desire for our country.
(Dr. Ramon Ricardo A. Roque,