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Friday, April 22, 2005
Arroyo stands pat on 12% VAT hike
* Senate panel in bicameral body open to higher VAT rate
PRESIDENT Gloria Macapagal-Arroyo Thursday told the bicameral conference committee to approve a value-added tax (VAT) bill that will raise VAT rates from 10 percent to 12 percent.
Arroyo issued the statement expressing preference for a 12 percent VAT rate after months of claiming that she will allow lawmakers to decide on the rates of the VAT bill.
"They are mature. I don't want to nag them in public," she had said in a media interaction in Boracay Island Thursday while the senators debate on their version of the bill.
She said she does not give a hoot about the configuration of the VAT bill that will pass Congress as long as it will meet government's P80 billion target revenue.
The House version seeks to raise the VAT rate from 10 to 12 percent while maintaining certain exemptions while the Senate version seeks to maintain the 10 percent rate while lifting most of the exemptions.
But Thursday, Arroyo was singing a different tune: "It is my earnest hope that the bicameral conference committee will approve a version of the VAT bill that will increase the rate from 10 percent to 12 percent."
She admitted that the higher VAT rate is "seemingly bitter for us to swallow" but "I know this pill will save our economy from fiscal demise that could stem from having one of the narrowest revenue bases in the world."
"I, therefore, seek the understanding and cooperation of Congress in doing what is essential and necessary to ensure a stable and brighter future for our country and people," she said in a statement.
Malacañang started veering from its "hands off" policy Wednesday when Press Secretary Ignacio Bunye, also Arroyo's spokesman, said the emerging favored bill "is still short of what is needed to totally overcome our fiscal problem but will bring us across the threshold to a realm of solid economic confidence."
Executive Secretary Eduardo Ermita said Bunye's statement "is an effort at trying to influence them on the last minute to be able to come out with the correct VAT percentage that we will slap so we will get our correct figure."
Ermita said Malacañang favors the House version more because it would reportedly generate P91 billion in revenues, instead of just P80 billion.
Meanwhile, the Senate is now inclined to adopt a rate higher than 10 percent.
Senator Ralph Recto, chairman of the Senate panel in the bicameral body, admitted that he is open to suggestions from Malacañang as long as government's finance officers can justify the figures they eye to get by increasing VAT rates.
The Senate proposed retaining VAT rates at 10 percent and lifted tax exemptions while the House of Representatives proposed a two percent-increase in VAT rates.
"I am willing to consider the request of the President and to hear the explanation," Recto said, as he admitted having lunch with President Gloria
Macapagal-Arroyo two days ago to discuss the VAT. Malacañang wants VAT rates increased by two percent from the existing 10 percent.
Recto said it is the entire Senate that will decide on whether to adopt the 12 percent rate or not but if majority of the panel's members agree to increase the VAT rate, he would not be an obstructionist.
Finance Secretary Cesar Purisima, who was invited in the bicameral meeting Thursday, said the government needs a minimum of P60 billion in revenue from
VAT to avert a fiscal crisis and avoid a higher budget deficit in the future.
"We at the DOF (Department of Finance), it's to our interest to get as much revenue as possible because there are very few measures that can generate substantial revenue. That's the reason why we believe a 12 percent (VAT) is necessary," Purisima said.
He said last year the consolidated deficit was P233 billion and that it will reduce further through various tax measures. (JMR/JPM)
(April 22, 2005 issue)
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