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Saturday, January 14, 2006
P35B plus revenue eyed due to expanded VAT
By Roberto L. Bacasong
STARTING February 1, Filipinos will have to pay an additional two percent on top of the 10 percent expanded Value Added Tax (VAT) implemented late last year.
Finance Secretary Margarito B. Teves said the two percent expanded VAT increase is expected to generate P35 billion in additional revenues each year.
Teves was in Bacolod City Friday to lead the expanded VAT roadshow and regional launching of the 2006 Tax Campaign of the Bureau of Internal Revenue at the Bacolod Convention Plaza Hotel.
"Government will use these incremental revenues in part to finance pro-poor programs, which include improving education and healthcare services as well as construction of farm-to-market roads and irrigation facilities throughout the country," Teves said.
But before the expanded VAT will be implemented, Teves said, the Department of Finance has set conditions that should be followed.
He said the National Government should see to it that the supply and demand of products are balanced.
Teves said the government is sensitive to concerns about the impact of the rate increase on prices and continues to work to mitigate its impact on domestic prices.
"The government is implementing a range of measures to monitor unscrupulous operators seeking to take advantage of the situation by raising prices unreasonably," he said.
The Department of Trade and Industry (DTI) will be closely monitoring prices through close coordination with market and supermarket vendors' associations, through deployment of special market monitoring teams, and the deputation of labor unions to perform price monitoring and liaison with local price coordinating councils.
Teves also outlined additional measures aimed to mitigate the impact of the expanded VAT increase on domestic prices.
One is exempting the minimum wage earners from withholding tax.
Likewise, basic commodities, like vegetables, meat, fish and eggs, as well as low-cost housing and education expenses remain VAT-exempt.
Excise taxes on diesel (primarily used for public transport), kerosene (commonly used for lighting purposes in the countryside) and fuel oil (used for power generation) have also been removed.
For its part, the Department of Agriculture (DA) has implemented productivity, logistical and retail linkage enhancements aimed to reduce the costs of wage goods.
"We will make sure that the revenues generated by the VAT Reform Law will be used for deficit reduction and invested in services and infrastructure that directly benefit the people," Teves also said.
Teves added that the country's deficit incurred P160 billion. This year, he said, the National Government wants to reduce the deficit by P100 billion to P125 billion.
He stressed that the country needs to have a "balanced budget" so the government will no longer have to borrow from other countries.
During his visit, Teves stressed that they need the help of the local government units.
"We believe that this program will not prosper without your active participation," he said.
Meanwhile, Esmeralda Tabule, officer-in-charge BIR regional director here, said their collection for 2005 increased because of their massive campaign in the collection.
"All the revenue district offices in Negros Occidental and Negros Oriental have exceeded their target collections," said Tabule.
The expanded VAT domestic roadshow was also supported by the DTI, Department of Energy, DA, and the Investor Relations Office of the Philippine Government.
From Bacolod, the expanded VAT roadshow will go on to Tacloban, Cagayan de Oro, Butuan, Tuguegarao, Legaspi, and Cotabato and other major cities in the country.
(January 14, 2006 issue)
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