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Sunday, July 03, 2005
Gov't assures no price hikes on manufactured goods due to EVAT
TRADE and Industry Secretary Juan B. Santos, together with Finance Secretary Cesar V. Purisima and Energy Secretary Raphael Lotilla, assured that there will be no price hikes on manufactured goods, resulting from the implementation of the expanded value-added tax (EVAT), the regional office of the Department of Trade and Industry (DTI) here said.
But the Supreme Court (SC) Friday voted 13 to 2 to temporarily stop the implementation of Republic Act (RA) 9337 or the expanded value-added tax (e-VAT) law.
The temporary restraining order (TRO) issued by the SC took effect immediately upon its issuance and remains in effect until further orders of the court.
The high court 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.
2 major groups of petitioners earlier filed separate petitions against the e-VAT law which retains the 10 percent VAT rate but allows President Gloria Macapagal-Arroyo to increase it to 12 percent under certain conditions.
Acting regional head Sitti Amina M. Jain, however, said the EVAT implementation, admitted the three Cabinet Secretaries, would have a slight impact on fuel and power prices, it said.
Jain said Purisima and Santos were quick to point out that the estimated impact on fuel prices would be below 10 percent and maybe even closer to a minimal five percent.
Rex Tanchoco, speaking for the gasoline dealers, estimates that the impact on the EVAT implementation on fuel prices could be as high as 22 percent.
Lotilla, on the other hand, was more cautious and refused to give an estimate on the possible percentage impact of the EVAT implementation on power prices. He stressed that there are other mitigating factors, especially for lifeline consumers or those using below 200-kilowatt hours per month, Jain added.
This would involve a progressive billing system, subject to the approval of the Energy Regulatory Commission (ERC), which would use the lifeline rates in order to help shield lifeline beneficiaries from the impact of the VAT while support for the lifeline beneficiaries would be borne by those who are in a better economic position to absorb the increase, said Jain.
Lotilla, according to Jain, acknowledged though, the additional impact of higher global crude prices due to the "increasing appetite" by large industrial nations and China and India's growing demand for fuel.
The Energy Secretary, echoing President Arroyo's own administration, also recognized that the global competition for fuel and the resulting price hike "threatens the economic gains in the country."
Santos reiterated that as far processed goods are concerned, the EVAT implementation starting July 1 should not result in any price increases since the manufacturers are already subject to a 10 percent VAT.
Furthermore, the three Cabinet Secretaries cited the mitigating impact of the decision of the Cabinet Committee on Tariff and Related Matters to endorse to the President an Executive Order reducing duties on crude and finished petroleum products from 5% to 3% and from 3% to 0% for liquefied petroleum gas or LPG.
Purisima further explained that on the issue of the 70% cap on input VAT, the government would allow the transition period from July 1 to Dec. 31 this year whereby companies would continue to be allowed to use a 100 %t input VAT.
Using the six-month transition period, Purisima said government would work on the passage of an amendment of the EVAT to allow a 100% input VAT. |
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