Press Release
August 18, 2008

Legarda urges use of VAT income for mass transport, farm works
To spur new jobs for poor, fight double-digit inflation

Sen. Loren Legarda has urged the National Economic Development Authority (NEDA) to push for the mobilization of billions of pesos in value-added tax (VAT) revenues to roll out new mass transport systems and build up farm infrastructure.

"We definitely have high hopes that under the new leadership of former Senator Ralph Recto, the NEDA will be able to pursue sound and practical near-term development strategies aimed at achieving the highest possible employment rate, while fighting inflation," said Legarda, chairperson of the Senate committee on economic affairs.

Legarda said the construction of additional mass transport facilities as well as farm infrastructure would create badly needed jobs for poverty-stricken families.

"Construction-related jobs tend to benefit poor families directly and indirectly," she pointed out.

"A construction worker is likely to come from a hard up household. And ones he gets his wage, he is likely to spend some of the money to buy extra food in the nearest carinderia or food vendor, thus supporting yet another impoverished family," she added.

"Besides, we really have to build new mass transport systems and enlarge existing ones that are now under enormous strain," Legarda said.

High oil prices have forced a growing number of Filipinos to commute, and to use their cars less. "And many commuters are using the faster and more economical rail transit systems, and staying away from costlier and slower buses and taxicabs," Legarda said.

Meanwhile, the senator said building up farm infrastructure would not only provide more income for growers and new jobs for rural workers, but also ensure abundant food supply.

"And ample supply of farm produce is the best way for us to guarantee affordable food. As long as we have plentiful supply of food that is within reach of ordinary families, we can fight inflation," she said.

"In fact, the biggest driver of double-digit inflation rate in the last few months was not high oil prices, but the surge in the cost of rice, due to previous reports of massive shortages of the staple," Legarda said.

"As to employment, almost half of the totally jobless as well as underemployed are farm laborers. Thus, government should also focus on creating new jobs and livelihood opportunities in the countryside," she added.

Legarda has been batting for the suspension of the 12-percent VAT on petroleum products to provide material relief to consumers.

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page 2/Press Statement/Senator Legarda

"However, if Congress chooses not to suspend the VAT on oil products, then government should at least see to it that the extra VAT income is spent wisely to benefit the greatest number of marginal families that are hardest hit by soaring consumer prices," Legarda said.

The government collected a total of P53.31 billion in VAT revenues in the first six months of the year -- P9.6 billion or 18 percent higher than the amount generated over the same period in 2007.

The government has been using the incremental VAT revenues to fund direct cash transfers to the poor, such as the one-time P500-grant for small consumers of electricity and the one-time P500-allowance for senior citizens that do not get any regular pension from social security agencies.

"The cash transfers are okay. However, we have to reinforce the subsidies with spending that will actually produce additional employment, and thus provide new income streams for poor households. And this is where increased public infrastructure spending should come in," Legarda said.

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