Friday, October 21, 2005

Bracing for E-VAT

I have a growing suspicion that Filipinos are among the most taxed people on earth and with the Expanded Value Added Tax about to be implemented in a couple days, starting November 1, people are already bracing themselves for a sharp spike in their expenses.

As you may have already read or heard about, gasoline as well as diesel prices will definitely increase by about four to five pesos. Currently retailing at around 34 and 31 pesos respectively, the prices of fuel are expected to go up to 37 and 35 with some already painting a scenario of about 40 or 50 pesos per liter. The price of Liquified Petroleum Gas or cooking fuel will go up to around 521 pesos for an 11 kilogram tank.

When I was still with the DTI, I used to hear Mar Roxas (then Trade Secretary) explain that the impact of fuel on the cost of production of goods amount to just about 2 percent. It was hard to believe then and it is even harder to believe today. The math seems solidly worked out, but why is it that every one peso increase in the price of fuel almost always means a five peso increase in the price of fresh produce at the wet market? I don't have the data right now, but if you care to investigate, you can request the National Price Coordinating Council for the data on food and correlate that with the price of fuel.

Anyway, here we have a situation that Malacanang Palace has dubbed as the "bitter pill" everybody must take in order to get well.

Fine! Then Gloria should probably start spending for her own gasoline instead of billing the government, she should also spend for own food and electricity too while she is at it.

Rich people I know are already rethinking their spending schemes, what more of the poorer people I know -- myself included.

I depend a lot on my cellphone and telephone in the conduct of my writing business, soon enough I will have to pay 10% more for these services. Which means that I will most likely be spending around 2,000 bucks per month which this early is leading me to think of scrapping both expense items are unsustainable.

The cost of electricity will also increase similarly. So, for the remainder of the year, I will have go without airconditioning -- which is okay, really, since it's getting quite cool these days.

More later

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