New VAT Law

[unofficialplayer]

---

it's not gloating. i am simply sharing positive news. Fitch's rating reflects its view that "broader macroeconomic trends remain favorable with respect to growth, inflation and the external current account" of the country.

i am no economist but i do know that the rating will ensure cuts in our debt borrowings (interest payments), which in turn will help us pursue our efforts to reduce our budget deficit. also, an improved confidence in the country's economic prospects can attract more foreign direct investment.

and please, if i may point out, i am aware of the poverty and helplessness in this country.

[darkwing]

Fitch can do better by giving us a temporary debt relief

[billie]

hi!wat can u say about the new vat law then?

[dawn runner]

it's not gloating. i am simply sharing positive news. Fitch's rating reflects its view that "broader macroeconomic trends remain favorable with respect to growth, inflation and the external current account" of the country.

Whatever that means, IM STILL HUNGRY!. The Filipino people are still hungry. Fitch just try to prod the President to adopt policies favorable to creditors but detrimental to the Filipinos.

That comments comes like a consuelo de bobo for President Arroyo who is hungry ofgood news for herself, her family and her beleaguered administration.

You consider it positive news? It will only encourage the government to borrow more. Just look around. The investors are leaving the Philippines already because of this government which is reeking in corruption and which imposed an anti business tax rates.

[dawn runner]

This VAT law is unconstitutional. Under our jurisprudence, the taxing power is vested in Congress as the power to impose the tax is legislative in nature. Under the new VAT law, Congress unconstitutionally abdicated is inherent power of taxation by authorizing the President to increase the tax rate from 10% to 12%. Although the law seems to impose a condition for the President to exercise this prerogative, still such a remedy is only included in the law to camouflage an illegal exrcise of power.

The only instance where the President can impose tax rates is when the said power is vested in her in the so called "flexible tariff clause" as provided for in the 1987 Constitution. And this canonly be exercised with the authority of Congress because like I mentioned before, taxing power is basical a legislative function.

VAT is not a tariff. VAT is an internal revenue imposition and thus the power to impose its tax rate cannot be delegated to the Executive, i.e., the President.

[unofficialplayer]

[quote="dawn runner"]

Whatever that means, IM STILL HUNGRY!. The Filipino people are still hungry. Fitch just try to prod the President to adopt policies favorable to creditors but detrimental to the Filipinos.

That comments comes like a consuelo de bobo for President Arroyo who is hungry ofgood news for herself, her family and her beleaguered administration.

You consider it positive news? It will only encourage the government to borrow more. Just look around. The investors are leaving the Philippines already because of this government which is reeking in corruption and which imposed an anti business tax rates.

change doesn't happen overnight. there's no magical wand that can make all the poverty go away, much as we all want it to.

[Empress_Of_Drac]

@jerx d great

ncreasing the vat is a good option to the government but impression to the ordinary people like me..... but in the end, filipinos should support the actions and procedures that the government is dealing. lets support them and watch them also for thier actions...

...i agree...that's the only thing that we could be of help...to support our govt..instead of whining n shoutin' n doin' nothin'..like wot some activist pwepzz are doin' on the streets...wastin' their time wavin' their freakin' flyers...dheck!...

[Empress_Of_Drac]

@dawn runner

Most importantly this VAT will not help the people because more taxes will only mean more money to steal from our crooked politicians.

I oppose this VAT because the way our politicians govern and the way the present administration is handling our financial affairs doesnt make a good promise.

This VAT will only burden the people more.

..i fear your fearless forecast madam..este mr nagjoggingugkadlwon...hehehe...ur psychic power overwhelmed the optimism on me...unfortunately i think ur forecast is too pessimistic...and contains too mwuucchh prejudice towards our govt officials....u r counting the chickz even before they came out from their shells...some people are always shoutin' that PGMA has done nothin' to be of used in our country...but then if she do somethin' to benefit the people...they are still shoutin' that it's not for the people but for the govt officials' pockets....omg! just cant get over it...pastilan la juy madag an si gloria...kay bisan unsaon pangitaan jud ug sayop....imbis magtinabangay...nagbinitaray naman hinuon...pagkafaet..pagkatoytoy..ug pagkaimmoral....hahay..bow..toink...

[Empress_Of_Drac]

@unofficialplayer

change doesn't happen overnight. there's no magical wand that can make all the poverty go away, much as we all want it to.

...PABOR!...an illin' country for almost how many decades cannot be healed by a leader how good she maybe in just a blink of an eye...with all the blabbings and oppositions...threats, problems, terrorisms, poverty, etc...etc....omg! i wish ol pipol can realize that....

[dawn runner]

All declarations about VAT to ease the life of ordinary Filipinos are pure hogwash.

The bulk of the revenue to be earned by VAT will go to foreign debt and to close the widening budget deficit. So people should not be surprised that despite VAT there will be no jobs, no food, no medicines, no infrastructure to the Filipinos.

Fiscal reform payback to go to debts, deficit

By Jun Vallecera
Friday, 06 03, 2005

The government has allowed itself to be persuaded by the credit rating firm Standard and Poor's to so-called “front load” or speed up its debt payment program rather than put first emphasis on strengthening its own capability to underwrite the country's growth.

This broad plan was surreptitiously embedded in the fiscal blueprints both for this year and the next where the budget shortfall had been cleverly crafted to hit no more than P180 billion and P89 billion, respectively.

The blueprint included estimated increased revenue collections from the recently-enacted expanded value-added tax (VAT) law.

Finance Secretary Cesar Purisima had said proceeds from the e-VAT law would be used mainly for capping the budget deficit of the revised P151 billion target.

In presenting these and other economic figures before a visiting team of analysts from Standard and Poor's, government representatives outlined to the visitors plans in which the budget imbalance would fall to just 1.5 percent of local output or the gross domestic product next year, equivalent to P89 billion.

This compares with this year's budget deficit seen to hit P151 billion, sharply down from original target of P180 billion.

The budgetary shortfall last year totaled 187.1 billion, equivalent to 3.9 percent of GDP.

The S&P team led by Agost Bernard met with financial reporters Wednesday and said the New York-based rating agency would focus on two things, one centering on capital spending and the other on the debt reduction program.

“It's not that we're against capital spending. It's just that what would be desirable is some kind of concerted front loading effort toward debt reduction,” the lead analyst said.

Official sources, who wished to remain anonymous, told reporters that these and other numbers were to be presented to the interagency Development and Budget Coordination Committee (DBCC) for its collective approval.

The Cabinet-level body is headed by Budget Secretary Emilia Boncodin and has the secretaries of Finance, Trade and Industry, Socio-economic Planning, along with the Bangko Sentral ng Pilipinas governor as ex-officio representative, as members.

Officials admit the fiscal numbers for 2006 have yet to be analyzed and approved by the DBCC but that they were nevertheless presented to the visiting analysts first.

Bernard acknowledged his team was told the adjusted budgetary shortfall this year of P151 billion from original target of P180 billion would fall even lower next year to just P89 billion as a result of the passage of the increase in the VAT rate from 10 percent to 12 percent, the similar increases in the excise rate for sin products and an earlier measure rewarding the main collection arms of government for work done well.

Previous numbers released by government showed that the indebtedness of the national government were to fall to just 75 percent of GDP from 78.7 percent of GDP last year and lower still next year to just 72 percent of GDP next year.

From last year's 5.4 percent of GDP, this year's interest payments alone were to increase to 5.9 percent and then to 6 percent of GDP next year.

This was consistent with government's goal of reducing NG debt from last year's GDP equivalent of 78.7 percent to this year's anticipated 75 percent of GDP and on to next year's 72 percent of GDP.

The country's external debts were to fall from last year's GDP equivalent of 37.4 percent to this year's 35.6 percent and next year's 34.6 percent.

Local debts were to fall from last year's 41.3 percent of GDP to this year's 39.3 percent and finally to just 37.4 percent of GDP.

Gross capital formation, on the other hand, was seen to accelerate to 7.3 percent from last year's 5.1 percent and to a lower rate of only 4.5 percent next year.