Arroyo wanted e-VAT delayed, 'defectors' claim
First posted 02:48am (Mla time) July 10, 2005
By Michelle Remo
Inquirer News Service
Editor's Note: Published on page A1 of the July 10, 2005 issue of the Philippine Daily Inquirer
TWO former senior government officials who resigned their cabinet posts said President Macapagal-Arroyo wanted to delay the implementation of the expanded value-added tax law, her administration's key measure to solve the country's fiscal problem.
Ex-Finance Secretary Cesar Purisima and former Trade and Industry Secretary Juan Santos revealed this for the first time when they met reporters to explain their disenchantment with Ms Arroyo's leadership.
Purisima would neither confirm nor deny reports that Ms Arroyo had a hand in the Supreme Court's decision on July 1 to issue a temporary restraining order on the e-VAT, a move which reportedly helped spur his decision to resign.
But Purisima said Ms Arroyo had expressed her intention to have the implementation of the law postponed.
Santos, for his part, said Ms Arroyo consulted him on whether there was a legal means to have the law postponed.
"I told her this should not be done because this is not going to be good [for the economy]," Santos said in an interview on the sidelines of a forum calling for Ms Arroyo's resignation held at the Ateneo de Manila University.
Santos, whose main task at the Department of Trade and Industry was to invite foreign investors to do business in the Philippines, said the suspension of the e-VAT was something that would send a wrong signal to investors.
After the issuance by the Supreme Court of a TRO, the Department of Finance immediately said it would file a petition to lift it because of its adverse effects on the government's fiscal reform program.
The DOF estimated that the e-VAT law would generate as much as P31 billion in revenues in the second half of the year and as much as P105 billion every year starting next year.
The economic team, led by the DOF, has issued encouraging projections that the national government could finally wipe out its huge budget deficit as early as 2008, with the e-VAT law in place.
With the e-VAT's suspension, however, Purisima said the government stood to lose P4 billion to P5 billion monthly, or P130 million to P165 million daily, in potential revenues.
The expectation of having a zero deficit by 2008 would also have to be pushed back, he said. "When I accepted the job, the question I had was why our country is poor, considering that it is rich in natural and human resources," Purisima said. "I realized that it was because our government was posting huge losses that required regular borrowings."
"Political will, therefore, was needed to raise revenues for the government."
The e-VAT law was a fiscal reform measure that was criticized by some sectors because of its effects on the purchasing power of consumers.
"She (Ms Arroyo) expressed desire to delay the VAT, saying she was concerned with price impact. But that was why we came up with mitigating measures," Purisima said.
One of the mitigating measures included the reduction of tariff on imported oil from 5 to 3 percent, the DOF said.
Purisima has supposedly been telling friends privately that he suspected Ms Arroyo of influencing the Supreme Court in suspending implementation of the e-VAT measure.
Justice Secretary Raul Gonzalez flatly denied that Ms Arroyo had done any such a thing.
Santos also said that some of the programs he and the others were asking Ms Arroyo to initiate involved the reorganization of the Commission on Elections and continued government efforts to get the contested San Miguel Corp. shares alleged to have been bought by industrialist Danding Cojuangco using coco levy funds.
Commenting on Purisima's statements about Ms Arroyo, Executive Secretary Eduardo Ermita said: "It's not fair for him to say that against the President. As President, she always has the interest of the country at heart and I think his suspicion on the e-VAT has no basis."