|
Thursday, July 07, 2005
Tax failure could cause fiscal crisis: biz sector
MANILA-Business leaders warned yesterday that a Supreme Court injunction against President Gloria Arroyo’s key tax reform measure could drive the Philippines closer to a financial crisis.
The court on Friday indefinitely suspended the collection of an expanded value-added tax (VAT) that took effect on the same day, citing a challenge on its legality.
The government promptly appealed the interim ruling, but the court voted to keep the injunction in place on Tuesday pending a hearing on the issue.
The Makati Business Club expressed “grave concern and disappointment with the Supreme Courts decision,” calling it “a big setback to the government’s effort to raise revenues as part of its fiscal reform program.”
It called for a swift resolution of the VAT issue “in order to avert a serious fiscal crisis from getting even worse in the near future.”
In Cebu, Robert Go, president of the Cebu Chamber of Commerce and Industry (CCCI), Go told Sun.Star Cebu that holding back on the implementation of the new VAT law would give the country a bad image and send a wrong signal to the world, aside from lowering the country’s credit ratings by Standard & Poor’s Ratings Services.
A downgrade of the country’s credit ratings would make it more costly for the Philippines to borrow money from abroad.
The tax is a key reform initiative for Arroyo.
The Makati business group said: “On top of the revenue losses, the Supreme Court’s decision once again sends negative signals to investors about the instability and unpredictability of economic policy and legislation.”
Cora Guidote, a senior economic adviser to President Arroyo, said international ratings agencies Fitch and Standard and Poor’s have “expressed concern about a prolonged delay” in the tax collection as it would “weaken the country’s fiscal reform program, which, in turn, could erode investor confidence.”
Despite the pain it will bring consumers, the tax had been hailed by various quarters.
The VAT law “will result in the government’s borrowing less,” according to CitiGold Wealth management banking, a member of the Citibank group of companies.
According to a CitiGold statement, the e-VAT gives the Philippines a chance to upgrade its credit rating with the World Bank, increasing its chances of gaining financial support from the organization.
But Philippine borrowing, especially for debt servicing, would also decrease with the estimated P28 billion additional income expected from the e-VAT. (AFP/JBN)
(July 7, 2005 issue)
Write letter to the editor.Click here.
Join the Sun.Star message board.Click here. |
|
[return to top]
[home]
[network page]
|
LOCAL NEWS
BUSINESS
OPINION
SPORTS
LIFESTYLE
FEATURE
SUPERBALITA
WEEKEND
|
