Lacson: VAT should be used to ameliorate poverty

April 20, 2010

Liberal Party senatorial bet Atty. Alex ‘Pinoy’ Lacson said that proceeds from the Value Added Tax (VAT) should be put to good use as a revolving fund for specific anti-poverty programs of the government like micro-financing and other programs meant to encourage small entrepreneurship. Lacson noted that government has to look at policy measures to ensure that VAT proceeds are being used directly to combat the scourge of poverty.

“VAT should be used directly for the intended beneficiaries and that is the poorest of the poor among the Filipinos. Clearly, VAT collections are needed to fund financial assistance and social programs that should uplift Filipinos’ status in life and provide not just daily sustenance but a means to end the cycle of poverty. I believe we really need to support SMEs and encourage entrepreneurship among Filipinos.”

Lacson says that it is only right that VAT, which has made utilities and commodities so much more expensive for the average Filipino, should be redirected to anti-poverty programs instead of being used to fund infrastructure projects or pay off government loans. A third of the government’s yearly budget is being used to pay off public debt; and a portion of the budget comes from VAT collections.

While Lacson noted government’s continuous efforts at lowering poverty incidence, self-rated poverty continues to be high. In the latest SWS survey, 43% of Filipinos or about 8.1 million Filipino families still rate themselves as poor. Translate this, and you have about 40 million Filipinos living below the poverty threshold.

Lacson says more laws should be passed to institutionalize anti-poverty programs, like micro-financing and entrepreneurial support programs. Such programs, says Lacson, should be strengthened through a combination of technical training and agency or support facilities.

Lacson believes that if government succeeds in generating more jobs for at least 2% of these families, this will translate to immediate relief since the main cause of poverty is the high unemployment rate. More funds should thus be made available to assist small and medium-sized enterprises since this sector is the largest employer in the country.

Poor families needing direct financial assistance should be a priority sector for a new government. Lacson believes there has to be specific program for unemployed heads of families, or underemployed heads of families with monthly income of 10,000 pesos and below. Beneficiaries may be asked to pay off their “loans” by taking part as workers in government projects.

Others who go through a certain amount of training may be encouraged to participate in small entrepreneurship programs or join organizations or cooperatives that engage in such programs. If elected to the Senate, Lacson stated that he would like to make this a priority to give dignity and a chance for a new life to poor Filipinos.

“I have seen first-hand the changes a microfinance and micro-entrepreneurship program can bring to the poor. I was once privileged to accompany a group that support such programs, and I have seen how such programs not only changed the life of a single family, but also extended its benefits to the rest of the community. A family that is able to escape the cycle of poverty is now able to hire their poorer neighbors, establish downstream or distribution links, and provide better education to their children. The multiplier effect is simply amazing,” Lacson said.

Lacson vowed to work on anti-poverty measures, including those that support entrepreneurship among Filipinos living below the poverty threshold. Entrepreneurship, says Lacson, is the key to ameliorating the plight of poor Filipinos.

Lacson is also batting for educational changes that will spark the interest of Filipino children in engaging in livelihood and small entrepreneurship programs, and hopefully help keep them in school.

“Education is still the great emancipator. It equalizes the economic opportunities of people. I am an example of such, since I came from a struggling family, but I overcame poverty by finishing my studies. If the poor has access to education, more people will be able to ascend the economic ladder. We must widen the ranks of the middle class and an effective way forward is for us to educate our children on the importance of creating opportunities, and increase the number of entrepreneurs and job-generators among us.”

This, says Lacson, is the secret why Malaysia, Singapore and Korea were able to uplift the lives of their citizens. Lacson says SMEs are the engines of economic growth and by encouraging a wider number of people engaged in entrepreneurship, that will lower poverty incidence.