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Thursday, February 02, 2006
Delaying hike of RVAT will be a ‘wrong signal’
THE two-percent increase in the 10-percent reformed value-added tax (RVAT), which took effect yesterday, will have an immediate negative impact on the people’s spending.
But economist Cayetano Paderanga Jr. said postponing the implementation of the RVAT increase –to 12 percent from 10 percent— will send “a wrong signal” to the global environment about the ability of the government to implement measures to curb the country’s budget deficit.
Sustain
In an economic briefing hosted by the Bank of Commerce at the Waterfront Cebu City Hotel and Casino yesterday, Paderanga said the full implementation of the RVAT, together with an improved tax collection, will sustain the positive performance of the economy in the fourth quarter of last year.
The RVAT increase should bode well for the country’s fiscal prospects, according to PCCI Securities President Francisco Liboro in a report by Associate Press.
Paderanga, chairman of the Institute for Development and Economic Analysis Inc. (Idea), said the country’s 5.1 percent gross national product (GNP) or income during the said quarter was more than the 4.7 percent forecast.
“Fourth quarter results were better than expected,” he said.
Paderanga said the government can also sustain the positive economic growth, if the political situation will stabilize and if no further spikes in the world market will occur.
Trade partners
Maintaining a good relationship with trade partners can also sustain economic growth, he said.
Meanwhile, share prices closed flat yesterday amid profit-taking on select blue chips, in a performance which mirrored trade elsewhere in the region, dealers said.
They said investors were still digesting an overnight rate hike in the United States, and the possibility that there could be more to come, while the local profit taking was not unexpected in light of recent gains.
Gains in Philippine Long Distance Telephone Co and Metrobank, however, helped offset losses elsewhere.
The composite index ended down 1.87 points at 2,143.52 after trading between 2,136.13 and 2,149.81. Volume reached 5.24 billion shares worth P1 billion ($19.23 million).
Losers outnumbered gainers 62 to 35, while 45 stocks ended unchanged. The broader all-shares index advanced 3.98 points to 1,031.11.
”The market has been going up for six days. This is just a healthy correction,” said Nestor Aguila of DA Market Securities Inc.
He said investors were looking for prices to subside before coming back in again ahead of more corporate earnings due out this month.
The two-percent increase in the RVAT has already been discounted by the market in its recent rally some dealers noted.
“The momentum has fizzled out. The market is taking a breather after recent gains,” said Lawrence de Leon of Accord Capital Equities. (JBN/with AP/AFP)
For Bisaya stories from Cebu. Click here. (February 2, 2006 issue)
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