What's Your Kinda E-VAT?

The new E-VAT scheme has finally slithered through the Congress amidst a dramatic battle of the filibusters, complete with a walkout and heated exchange of spiteful words that for once there, you’d think we are watching the Taiwanese parliament, where fisticuffs among lawmakers are but a daily thing. So what version got through? Reports declared that the bicameral version was the one that got away, meaning to say, the E-VAT rate will remain at 10% but the taxable subjects---goods, services and what-nots---would expand significantly to include new items such as electricity and petroleum products. You’d think that the passed EVAT law is the less evil version among all versions but I think it is still the same animal clothed in lamb’s skin; it would still be a bringer of additional burden and would still propel the usual hardships any tax legislation often brings. Don’t be misled. Nobody should look and feel heroes here by false impressions.

Minority Floor Leader Congressman Escudero bowed to disembowel the newly passed EVAT Law by hurling it all the way to the Supreme Court with complaints that it did not fulfill the constitutional requirements of “proper emanation” . You see, all tax laws must be initiated by the Lower House and Escudero contended that the passed version was one that was engineered and designed by the Senate alone---which I think is completely false. The “emanation” requirements should have already been fulfilled since any tax law should only be started and begun in the Lower House and nothing prohibits the Senate or any bicameral committee to filibuster upon it and tinker with it, just like in any other bills. His Supreme Court gambit may not work this time.

Congressman Escudero should instead question the new EVAT Law clause that reportedly allows President Macapagal-Arroyo to increase the rate to 12% without any Congressional approval. Now, this one is really for the books and entirely queer and unprecedented. In Taxation Laws, there is what we know as allowed prerogative by the president to increase and decrease tariff rates, a sort of an emergency power, where the President of the land would be allowed to take necessary measures, in the form of timely adjustments in tariff rates of certain imports, without the usual lengthy and tedious proceeding of lawmaking. And so, in some particular instances, the President could allow tax exemptions of certain imports of a big investor as an incentive without asking prior acquiescence from our lawmakers. Or in some instance, the president could anytime adjust the tariff rates of certain products anytime he or she desires, in response to the global international situation. Before GATT and WTO, countries tend to protect their markets by imposing high entry tariff rates without warning or hints. When these things happened before, our country could retaliate immediately by giving the President “emergency taxation powers” by also increasing the tariffs rates of products coming from “hostile” merchandising countries, without any delay. So this is really the cause or justification why in some manner, the President before was allowed to tinker and adjust tariff rates in order to respond to emergency situations or urgent necessity to accommodate huge investors. This is the “one exception” and the single instance where the taxation is not in the hands of Congress, a sort of an anomaly to the rule on delegation of taxing powers, which should only be exercised by Congress.

But now, by some queer circumstance, the President is allowed to increase the EVAT rate without Congressional permission. This is clearly not sound and in violation of our fundamental precepts on separation of powers and constitutional mandate. The taxing power should not in any way be in the hands of the Executive Branch of our government for this may give rise to abuse, oppressiveness and callousness.


The debacle on the EVAT Law may not die down soon and may drag towards a long and winding road, and into the august halls of the Supreme Court.
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