Press Release
May 26, 2010


Independent senator Chiz Escudero today said the Department of Finance (DOF) is only nitpicking on the incoming administration when it said that the incoming Aquino administration should not anymore waste the "honeymoon period" to adopt proposals to raise the VAT from the current 12% to 15% to avoid ballooning budget deficit.

"Honeymoon is not something you abuse and take advantage of. The next administration should first seek to plug loopholes and corruption in revenue generating agencies. As for any administration, raising taxes should never be the first option in looking for income for the state". Escudero said if raising the VAT is really needed to arrest the budget deficit, the current administration would never have lost time doing it under their tenure.

"Why pass the buck on the incoming administration to plug their income-generation leakages? My stand then as is now has never changed. Let the government run after those delinquent and unscrupulous businesses and individuals who continue to evade paying their taxes. We might even start with running after corrupt government officials who pocket from making deals with these tax evaders".

According to a World Bank study in 2004, the state loses 300 billion pesos a year to corruption from its revenue generating agencies. The report says the Bureau of Internal Revenue (BR) is losing 200 billion a year while the Bureau of Custom is wasting away 100 billion pesos a year to corruption.

"Whatever we would stand to generate from raising the vat from 12 to 15 percent is very minimal as compared to what we should be collecting yearly from the corrupted revenues".

The senator added that the state can plug budget loopholes if it judiciously spends its resources on primary needs and priorities. "Do away with excessive travels for government officials, cut unnecessary expenses like this".

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