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Wednesday, May 11, 2005
Senate ratifies consolidated VAT bill
MANILA -- After six months of debates, the Senate ratified Tuesday the expanded value-added tax (VAT) bill, which retained the 10 percent rate but gives President Gloria Macapagal-Arroyo authority to increase it to 12 percent under certain conditions.
The ratification followed the approval by the bicameral conference committee, composed of House and Senate representatives, of a reconciled version of the VAT bill on Tuesday.
Congressmen favored the raising of the rate to 12 percent while senators batted to retain it at 10 percent minus the exemptions given to some sectors.
Approved by the bicameral committee was the retention of the rate at 10 percent. Arroyo, however, was given authority to increase the rate to 12 percent by next January if certain conditions were met. This includes VAT collection exceeding 2.8 percent of the Gross Domestic Product (GDP) or the national deficit exceeding 1.5 percent of the GDP.
In the consolidated version of the bill, certain exemptions were removed, thereby paving the way for the imposition of VAT on the power sector, and the "no pass-on provision" taken out. This now allows power and other sectors to pass on VAT to their consumers.
"Let's keep the VAT simple. Two-thirds of the world use VAT but without the 'no pass-through' provisions," said Senator Ralph Recto. He was happy the bill was at last passed.
Senate President Franklin Drilon said VAT is a consumer tax, meaning that it should be paid with every item purchased or consumed.
Seven out of nine senators signed the report. They are Recto and Senators Rodolfo Biazon, Richard Gordon, Manuel Villar, Edgardo Angara, Juan Ponce Enrile and Sergio Osmeña III.
Only Senators Joker Arroyo and Maria Ana Consuelo Madrigal voted against the bill because they said it would be an additional burden to the Filipino people.
"I stress my opposition to the increase of the VAT rate from 10 to 12 percent through the standby authority for the plain and simple reason that the increase is something that social classes E, D and C, in the light of their limited earnings, cannot absorb," Senator Arroyo said.
Enrile said that even if supports the bill, he will question before the court the legality of the standby authority given to President Arroyo.
Senate Minority Leader Aquilino Pimentel Jr. warned that the standby authority provision for President Arroyo violates the 1987 Constitution.
Pimentel said under the 1987 Constitution, the President can modify tariff rates, import and export quotas and other duties and imports. The delegated authority can only be exercised by the President when Congress is not in session, he added.
The revenues for government from the VAT bill are expected at P35 billion to P62 billion for the remaining seven months of the year as estimated by legislators. (JPM)
(May 11, 2005 issue)
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