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Thursday, September 22, 2005
Business sees R-VAT as threat to investors
The Philippines could lose investors — both local and foreign — if it implements the Reformed value-added tax (R-VAT).
Cebu Chamber of Commerce and Industry (CCCI) president Robert Go said a multinational company engaged in the manufacturing of vehicle tires has already expressed its intention to move out of the country and transfer to other Asian countries if the government increases corporate tax to 35 percent and pushes through with the 70 percent cap on input taxes.
He told Sun.Star Cebu that during a conference in Beijing, China, Goodyear Philippines president Davin Morin complained of R-VAT’s provision on putting a 70 percent cap on input taxes.
Layoff
The provision could result in the company’s laying off of workers, Go said quoting Morin.
“Morin said Goodyear Philippines’ survival was anchored on the export market to the Asean region. The cap will greatly affect their competitiveness in the market so they will lose out to Goodyear in Malaysia and Thailand. This will result in a lower production and job loss.”
“If we lose foreign investments that are already here in the country, how can we attract investors to come in? This will be a big dent to the Philippines (efforts to attract investment), a black eye to the economy,” Go added.
Corporate tax
He said Goodyear Asia president Pierre Cohade also revealed that the company is also concerned about the increase to 35 percent of the corporate tax.
During the Cebu-leg of the government’s R-VAT roadshow at the Waterfront Cebu City Hotel last week, Finance Undersecretary Emmanuel Bonoan said one of the non-VAT reform measures of the revised law is the increase of corporate tax rate to 35 percent up to end of 2008.
But he had said the rate will automatically be reduced to 30 percent by 2009.
He said the R-VAT is very important not only because it will help the country solve the fiscal crisis, but also because the additional revenues can be used to increase the quality of social services such as health, education and environment preservation.
Projects
Bonoan had said some 50 percent of the local government’s share in incremental VAT collections are earmarked for the construction of school buildings, school furniture, training of teachers, health premiums, scholarships, environmental conservation and agricultural modernization.
He had refuted claims that VAT is anti-poor, saying the tax system recognizes the needs of the poor and exempts basic commodities and socially sensitive products.
Among the VAT exempt commodities are agricultural and marine products in their original state, such as vegetables, meat, fish, fruits, eggs and rice, among others. (JBN)
(September 22, 2005 issue)
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