President Arroyo plans to cut the tariff on imported crude and refined oil products to three percent from five percent to cushion the impact of rising oil prices abroad, Press Secretary Ignacio Bunye said in a statement without giving a timetable for the reduction.
Crude oil for August delivery reached a record $60.47 per barrel in after-hours electronic trading on the New York Mercantile Exchange. The Philippines imports most of its oil requirements. The planned tariff cut, which is yet to be approved by Finance Secretary Cesar Purisima, won’t boost import volume, Beltran said.
"Any revenue that we will lose from the tariff reduction will be offset by higher collection on value-added-tax,’’ Beltran said in an interview in Manila. The government expects to lose about P5 billion annually from the planned tariff cut, he said.
President Arroyo last month signed a bill lifting exemptions on the value-added-tax, expected to raise P28.3 billion in additional revenue this year, and increasing the rate to 12 percent from 10 percent next January.
Investors
The president plans to narrow the deficit for a third year in 2005 to assure investors the nation can pay its close to P4 trillion of debt. The deficit fell to P187 billion in 2004 from P200 billion in 2003 and a record P211 billion in 2002.
The deficit narrowed 40 percent to P7.6 billion in May from a year earlier as tax collection rose 18 percent. For the first five months, the deficit reached P67.8 billion, nearly two-fifths of the government’s forecast for this year.
Government debt tripled to P3.87 trillion in March from P1.35 trillion in 1997, when the country last had a budget surplus. Moody’s Investors Service in February cut the nation’s debt rating two levels to B1, four steps below investment grade. – Bloomberg