Value Added Tax (VAT) is a tax measure designed to address the Philippines’ fiscal deficit.  At first, it was levied upon a select number of goods and services, then its coverage was expanded to include more goods and services (Expanded VAT) until it became the Reformed VAT which increased the percentage of tax from 10% to 12%.

             Before we look at the VAT’s incongruous relation to the fiscal crisis, we should look first at the true nature of the problem.  Fiscal crisis is a budgetary problem in which the demands of spending cannot be met by the available fund.  In short, the Philippines has too little money to finance its needs.  Take note, needs not wants.  With this scenario, the country is at the risk of a financial collapse which could trigger wide scale economic breakdown and more widespread poverty. 
The question is why do we have this problem right now?  Three answers:  poor tax collection system, improper investments and graft and corruption.
          Our tax collection system is full of loopholes.  One perennial problem is the issue on official receipt.  It is the belief of many buyers that this piece of paper is insignificant.  They just don’t see the importance of the official receipt for the big picture of tax collection.  Massive information campaigns have been done but there is one drawback.  Instead of the official receipt, business entities give out cash invoice.  When purchasers receive the cash invoice they think that was the official receipt.  But taxable income is determined by the official receipt, not the cash invoice.  Many tax cheaters also place dishonest receipt entries.  The result is misdeclared tax statements especially among the bigtime income earners.
          Losing investments contribute also to the fiscal crisis.  The government ventures into what it thinks to be potential money-making ventures only to realize later that the investment does not make positive returns but instead losses.  The nuclear power plant in Bataan and the Centennial Airport Terminal 3 are just two of the many liabilities of the government at present.
          Graft and corruption is probably the biggest culprit.  From GMA’s administration going backwards, this problem has been eating up a large chunk of the financial survival of the country and yet not one ‘big fish’ has been sort of ‘roasted’ accordingly.  Close to $50 billion dollars have been estimated to have been lost by the Philippine government over a 20-year period, an amount which is enough to cover the foreign debt of the country.  And even if there are cases filed against some prominent personalities including former President Joseph Estrada, none has so far been convicted.           Now, does the R-VAT address even at least one of the identified causes of our fiscal crisis?  The answer is an absolute NO.  In fact, the R-VAT only makes the grafters salivate the more. 
          And what is the effect of the R-VAT on let’s say, a professional who makes at least Php20,000 a month?  If he has a car which uses unleaded gasoline priced at Php38.00 per liter, he gives away Php4.56 to the government.  And if he uses his car five days a week, he shells out Php1,185.60 to the Ralph Recto Law in a year.  That is just for one liter of gasoline.  What about the R-VAT from the burger and chicken he eats at the fastfood store, the electric, water and telephone bills he pays, the consultation fees his doctor charges, the toll fee of the expressway, the groceries he buys, etcetera, etcetera?
          And if that’s how much he gives away to the R-VAT, what does he get in return?  Will his car run a kilometer longer, his burger and chicken one bite bigger, his electric, water and phone consumption longer, his body one bit stronger, his expressway travel faster, his groceries one item more, etcetera, etcetera?  No, it’s quite the opposite. 
          Will his paying the R-VAT improve the tax collection process?  Will every centavo of R-VAT make him enjoy every investment of the government?  How many more R-VATs does he have to pay for one grafter or corrupt government official to go to jail? 
          R-VAT is the wrong solution to our fiscal problem which was caused by a wrong tax collection system, wrong choice of investments and wrong persons in government.  R-VAT does not attack the cause of the disease and only worsens its symptoms.  It is better called as Very Atrocious Tax (VAT), Exploitative and Very Atrocious Tax (E-VAT) or Retarded and Very Atrocious Tax (R-VAT).  It better be repelled.