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Economic conditions

Transparency in VAT Collections: Rep. Andaya Demands Disclosure

Strategic Insights

— 1 min read

House Committee on Appropriations chair Rep. Rolando Andaya Jr. has called for transparency in the allocation of value-added tax (VAT) collections. He urged officials of the Department of Budget and Management and Finance to reveal where the payments from the expanded VAT will go, citing the public's right to know how their taxes are spent. Andaya emphasized that the people should be informed about the uses of VAT revenues, particularly if they are intended for social services, infrastructure projects, or other public expenditures.

Key Takeaways:

  • Rep. Rolando Andaya Jr. demands transparency in VAT collections, insisting that the public has the right to know where their taxes are spent.
  • The House Committee on Appropriations chair wants to disclose the shopping list of government projects funded by VAT collections, including infrastructure, healthcare, education, and environmental initiatives.
  • Andaya seeks to dispel fears that VAT revenues will be used to pay off public debt, insisting that every fundraising activity must have a clear beneficiary.
  • Pursuant to the Local Government Code, 40% of the incremental revenues from VAT will go to local governments.
  • Local governments are mandated to allocate 7.5% of their EVAT windfall for new classrooms and teachers training, 5% for health insurance, 7.5% for environment protection, and 5% for agricultural modernization.
  • Expanding the coverage of VAT, including fuel and power, and increasing its rate to 12% will raise P82.6 billion (US$1.5 billion) in new revenues.
  • The projected increment includes P12.7 billion from non-VAT items, such as the increase in corporate tax.

Statistics:

  • P82.6 billion (US$1.5 billion) in new revenues expected from expanding the coverage of VAT and increasing its rate to 12%.
  • US$1.5 billion equivalent of the new VAT revenues, calculated from the exchange rate of P82.6 billion.
  • 40% of the incremental revenues from VAT will go to local governments, amounting to P33.04 billion.
  • 7.5% of local governments' EVAT windfall (P33.04 billion) will be allocated for new classrooms and teachers training.
  • 5% of local governments' EVAT windfall (P33.04 billion) will be allocated for health insurance.
  • 7.5% of local governments' EVAT windfall (P33.04 billion) will be allocated for environment protection.
  • 5% of local governments' EVAT windfall (P33.04 billion) will be allocated for agricultural modernization.

Sources:

  • "Andaya: Public should know where VAT collections will go." Asia Pulse, October 19.
  • 2006 budget documents.
  • Republic Act 9337 or Reform VAT Law.
  • Local Government Code.

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