Taxation - is fair if burden falls on those better able to pay, than on the poor.

The VALUE-ADDED TAX (VAT) system in the Philippines took effect on January 1, 1988 by virtue of Executive Order (EO) No. 273, the law adopting the Value-Added Tax as implemented by Revenue Regulations (RR) No. 05-87 at the rate of ten percent (10%) on all taxable transactions. The tax rate was increased to twelve percent (12%) starting February 1, 2006 by virtue of Republic Act No. 9337 as implemented by RR No. 16-05 as amended by RR No. 04-07.

VAT is an indirect tax and the amount of tax may be shifted to or passed on to the buyer, transferee, or lessee of goods, properties, or services. It is a tax on consumption of goods, services, or certain transactions involving the same. It forms a substantial portion of consumer expenditures.

It is a "tax credit method" wherein the VAT "input tax" paid and incurred by a VAT-registered entity is creditable against the VAT "output tax" which it shifts to or passes on to another VAT-registered entity or buyer-end-user. In order words, Output Tax minus Input Tax.

Under the said system, the VAT-registered seller or transferor of goods, properties, or services merely acts as a collector or remittor of the tax actually paid by or shifted to or passed on to the buyer-end-user or final consumer.

While it may be an effective method of tax collection, its implementation is uncontrolled and unbounded, because it can be and actually have been abused by tricky persons simply by overstating purchases or expenses to overstate tax credit with the end view of evading remittance of correct amount of VAT.

Given the country's impoverished citizens, the uncontrolled and unbounded implementation of the VAT system have become so onerous and inequitable to the Filipino people who are not actually engage in business nor engage in undertaking affairs for profit like, exempt entities or non-stock, non-profit organizations whose affairs are not for profit such as: religious organizations, charitable organizations, and non-stock, non-profit educational institutions, and the like, because the entire burden of the tax falls on them.

The power of taxation is said to be in good exercise when it is equitable; i.e., if burden falls on those better able to pay. However, the present system seemingly favors those business enterprises which are for profit, particularly the VAT-registered ones because they are able to reclaim the VAT that was shifted or passed on to them by the VAT-registered sellers or transferors of goods, properties, or services since they are entitled to tax credit termed as "input tax".

Even those who are non-VAT-registered persons or entities but are engage in profit oriented activities are not so burdened under the present tax scheme, because the VAT that is shifted to or passed on to them can be converted to form part of their costs and expenses which are deductible from their gross income, reduces taxable income and consequently lessens income tax liability.

Under the present VAT scheme, the burden of tax falls on the Filipino people (end-users) and not upon persons or entities who are better able to pay.

The implementing rules and regulations could have provided certain limitations on input tax paid and incurred by a VAT-registered person that may be creditable against output tax, because in principle and in truth, all natural and juridical persons, whether or not engage in business for profit, are end-users in the real sense of the word, and not only the Filipino people.

Please help alleviate the Filipino people, especially the under-privilege, from the burden of tax. It should not only fall on them, but upon persons, firms, or companies engage in undertaking affairs for profit as well.