Commentary: EVAT, mitigating measures and the watching world


Commentary: EVAT, mitigating measures and the watching world

Iloilo City (23 February) -- Twenty-three days after the implementation of the increase of the value added tax rate to 12 percent from 10 percent in February 2006, varied reactions were declared from various sectors in the country and even in Washington.

Some cause oriented groups warned of social unrest if the added rate of the EVAT will be implemented with the belief that it will drain more out of the poor than it promised to give. But Malacanang appealed to the government’s critics to allow the full implementation of the new Expanded Tax law this year, saying its initial implementation last year had made many beneficial effects to the economy including the strengthening of the peso, reduction of the fiscal deficit and greater investor confidence in the country.

The efforts of President Macapagal-Arroyo to implement fiscal reforms likewise got the attention of Washington, as reported, paying close attention to the gains being made by the Arroyo administration’s economic reforms, particularly improvements in the Philippines’ business climate.

Also, the International credit rating agency Fitch ratings raised its outlook on the country’s debts to stable from negative, citing an improved fiscal prospect for 2006 and a more settled political environment but warn of pressures on spending.

Press Secretary Ignacio Bunye in one of his statements said that the whole world is looking upon us to fully implement our fiscal and economic reforms.

He said that the Department of Energy, Department of Trade and Industry, Department of Finance and other government agencies would adopt mitigating measures to protect consumers from unauthorized prices increases.

Here are some salient highlights following the 12 percent increase rate in the new EVAT implementation:

- The government is channeling a substantial fund into agriculture as a long-term strategy to mitigate the impact of two-percentage point value-added tax rise, which took effect February 1 on basic goods bought by the poor;

- The government will go after tax evaders and suspected smugglers as it strives to narrow its budget deficit, Finance Secretary Teves said;

- The government warned it will cancel the permits of retailers taking advantage of the higher value added tax to jack up prices and file criminal charges against those caught overpricing more than once;

- The local price coordinating councils in the provinces, cities and municipalities in the country have been alerted to monitor prices of essential commodities at the local level following the implementation of the 12 percent Expanded Value Added Tax rate;

- At the local front, the DTI-Iloilo Provincial head Diosdado Cadena Jr. reported that the price of commodities under their jurisdiction remained stable, and if there were some that may be observed to have price increases, these are only slight increases for the long overdue adjustments or product positioning. (T. Villavert/PIA) - - Diosdado Cadena Jr.