Monday, January 30, 2006
VAT hike won't raise prices of goods: Palace
MANILA -- Malacañang on Sunday tried to downplay the effects of the increase in the value-added tax (VAT) rate from 10 to 12 percent starting February 1 in view of the mounting prices of basic goods and oil products.
Press Secretary Ignacio Bunye said the increase in the VAT rate is "only two percent" and "it would not be a big additional tax."
Bunye, who is also President Gloria Macapagal-Arroyo spokesman, said Malacañang has "no control" over the price of oil in the world market and that the concerned agencies could only monitor the market and ensure that nobody will take advantage of the VAT rate adjustment.
He said the energy department is observing whether the increase in the price of liquefied petroleum gas (LPG) is caused by the rising price of crude in the world market. "It's a matter of really computing the right computations so that no one would take advantage," he said.
President Arroyo told residents in Tondo, Manila last week that government will talk to officials of Pilipinas Shell to convince them to keep prices of LPG low.
A primer from the Department of Finance (DOF) on the expanded VAT (Republic Act 9337) projects VAT revenues at P81.41 billion in 2006, assuming a 70 percent collection efficiency. The increase in the rate to 12 percent is expected to reap P35.12 billion in additional revenues.
The DOF said the additional revenues will sustain government's delivery of basic services, strengthen the peso, and result in better interest rates due to improved investor perception of the Philippines. (JMR/Sunnex)
(January 30, 2006 issue)
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