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Tuesday, March 29, 2005
Senate wants power firms to pay value-added tax
MANILA -- Senate debates would focus only on the lifting of value-added tax (VAT) exemptions enjoyed by the power sector, said Senator Ralph Recto.
Recto, chairman of the Senate ways and means committee, said though that the issue of whether to exempt the power sector, including independent power producers (IPPs), from paying VAT remains unresolved.
The Senate will hold a three-day special session starting Wednesday this week to continue the period of interpellations on and amendments to the VAT bill.
Recto said there are some senators opposed to the proposal to lift VAT exemptions for power firms as the tax may be passed on to consumers.
However, if the power sector is exempted from VAT, other sectors might ask for the same privilege, Recto added.
He said allowing exemptions would destroy the VAT chain and would not solve the problem of leakages.
Opposition Senator Sergio Osmeña III nevertheless said some senators are beginning to understand the contentious issues surrounding the VAT bill after several caucuses.
"This is really a judgment call on the part of the Senate. Kaya hinarap namin ngayon ang (That is why we had to look at) removing certain exemptions that would raise considerable revenue without increasing the VAT rate from 10 to 12 percent, Osmeña said.
Recto said he would stand by his committee report recommending the retention of the VAT rate at 10 percent and the lifting of exemptions.
He said Malacañang supports his proposal of a single VAT rate.
At Malacañang Palace, President Gloria Macapagal-Arroyo's spokesman Ignacio Bunye said she is confident that Congress' version of the VAT bill would enable government to put the country's fiscal house in order.
"We're confident that when everything is said and done and at the end of the day Congress will pass a VAT (bill) that will be satisfactory and will meet the minimum demands of the country," Bunye said.
He said the bill should also address the need for safety nets for lower income groups who would be affected by the increase in the VAT rate from 10 to 12 percent.
He said the lawmakers are already convinced that the VAT bill must be passed in order to remedy the country's fiscal problems.
"We are confident that most of our lawmakers would no longer need convincing on the paramount importance of the VAT bill on the national interest. We continue to have faith in the collective patriotism of our legislators," he said.
Senate President Franklin Drilon expressed confidence the senators would consider the paper made by 11 University of the Philippines (UP) economic professors on the VAT bill.
He welcomed the support of the academicians to the increase in VAT rates from 10 percent to 12 percent as it would benefit the government and help improve the economy.
"I am confident that the statements of the UP professors will weigh significantly in the decision-making process of my colleagues in the Senate once the VAT bill will be taken up during the forthcoming special session of Congress," Drilon said.
Drilon reiterated that in order to attain a permanent solution to the country's financial problems, there is a need to approve the expanded VAT bill.
"At the end of the day when all the debates are done, I am certain the senators will uphold reason and decide on the VAT bill based on what they believe is in the best interest of the nation," Drilon added.
Senator Recto said the paper presented by the UP economists is not new because they have already submitted it in public hearings on the VAT bill.
"They were just being consistent and they wanted to see the lifting of exemptions and at the same time increase the rates from 10 to 12 percent," he said. (JPM/RB)
(March 29, 2005 issue)
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