Saturday, July 02, 2005
High Court suspends law on value-added tax
MANILA -- The Supreme Court (SC) voted 13 to 2 early Friday night to temporarily stop the implementation of Republic Act 9337 or the Expanded Value-Added Tax (E-VAT) Law, in a move that could give consumers some respite amid the political upheaval.
In a resolution issued at 6:30 p.m., the High Court said the temporary restraining order (TRO) is effective immediately until further orders.
Two major groups of petitioners earlier filed separate petitions against the E-VAT Law which retains the 10 percent VAT rate but allows the President to increase it to 12 percent under certain conditions.
The E-VAT law, signed by President Arroyo into law last May 24, also lifted VAT exemptions on fuel, power, non-food agricultural products and services rendered by doctors and lawyers.
The SC ruling came at a time when consumers were bracing for price increases, and with Arroyo facing possibly the worst crisis of her four-year presidency as the opposition accused her of cheating her way to Malacañang in last year's elections.
The expanded VAT was expected to raise the cost of production and, in effect, prices of basic commodities.
However, Department of Trade and Industry (DTI) 7 Director Asteria Caberte said consumers will feel "minimal" effects.
Inflation for all items in Central Visayas hovered at seven percent, which is lower than the national rate of 8.5 percent. But minimal month-on-month changes in the prices of rice, eggs and ready-made apparel were noted.
Exports, tourist arrivals and investments also increased during the first quarter this year, but more than over 380,000 persons remained jobless in April, the regional economic situationer reported.
International visitor arrivals increased by 24 percent, or a total of 113,000, while 237,000 domestic tourists visited the region.
The number of firms operating in economic zones grew to 179, indicating a three percent increase.
These are mostly manufacturing and information technology companies.
Employment in export zones also increased by 12 percent, or a total of 83,156 employees.
However, unemployment in the whole region still increased to 14.6 percent in April, from 12.3 percent in January.
This includes about 318,000 persons unemployed in January and 383,000 persons without jobs in April.
Department of Labor and Employment 7 Director Rodolfo Sabulao said he expects the figures to have increased by May, when more employment opportunities were opened to new graduates.
According to the report, the region's exports grew by six percent, or $999 million on top of the 22 percent growth last year.
In reaction to the SC's move, Corazon Guidote, presidential consultant on investor relations, said: "It's really a surprise. It's unfortunate. The National Government will work for the removal of the suspension as soon as possible."
Guidote explained that the E-VAT law is part of the Medium-Term Philippine Development Plan and the government cannot afford any more setbacks.
"It will send a bad signal to business community and will delay certain social programs, infrastructure programs but it will not affect deficit targets however," she said.
Budget Secretary Emilia Boncodin, for her part, said they were surprised by it but they respect the court's decision.
She said the TRO will enable the High Court to hear out the views of those for and against the E-VAT Law but she hopes the court will resolve the matter as soon as possible because the law is an important part of the government's economic agenda.
Chief Justice Hilario Davide Jr. and Associate Justice Reynato Puno voted against the issuance of the TRO, saying the collection of taxes cannot be stopped, being the lifeblood of the nation, without prejudice to their stand in earlier E-VAT cases.
On the other hand, Associate Justices Angelina Sandoval-Gutierrez, Renato Corona and Antonio Carpio, who called from Madrid, Spain, voted for the issuance of the TRO.
Associate Justices Consuelo Ynares-Santiago and Alicia Austria-Martinez voted for the issuance of the TRO through the phone.
The SC set the case for oral arguments on July 26 and ordered Finance Secretary Cesar Purisima and Bureau of Internal Revenue (BIR) Commissioner Guillermo Parayno to answer within 10 days the petitions questioning the legality of the law.
Purisima said they are "very disappointed" by the SC's move and said the law "is of grave importance to our fiscal reform program". He said the government will work on having the TRO lifted right away.
Presidential spokesman Ignacio Bunye said Malacañang respects the SC's decision "but consistent with the belief that e-VAT is our best prescription to solve our fiscal problems."
Opposition congressmen led by House Minority Leader Francis Joseph Escudero filed a petition and asked the Supreme Court to issue a TRO and stop the implementation of the E-VAT, calling it unconstitutional.
Oil dealers belonging to the three big oil players, namely, Petron, Shell and Caltex, and other gasoline companies also filed a motion for prohibition and sought the law's nullification because it violates the constitutional principles of uniformity of taxation and equal protection to all persons.
They also said certain provisions of the RA 9337 are "unconstitutional, arbitrary and oppressive, excessive and confiscatory." (ECV/JMR/Sun.Star Cebu/Sunnex)
Click here for a chronology of the crisis.
Click here for the transcript of Arroyo's confession.
(July 2, 2005 issue)
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