Concepcion urges Congress to repeal EVAT law

Industrialist and consumer advocate Raul T. Concepcion is asking Congress to repeal the expanded value added tax (EVAT) law when it convenes on July 24, to eliminate objectionable provisions which the Surpreme Court (SC) may find unconstitutional.

Specifically, the objectionable provisions include allowing the President to increase the VAT rate from 10 percent to 12 percent and increasing the corporate income tax from 32 percent to 35 percent.

According to Concepcion, "under the Constitution, all tax measures must originate from Congress."

However, Concepcion urged Congress to pass a new EVAT Law within the first 45 days of Congress otherwise, it would be up to the SC to decide on the EVAT issue.

The SC last week had issued a temporary restraining order (TRO) on the implementation of the EVAT.

The High Court is expected to hear oral arguments in the next 10 to 15 days and issue a decision soon after.

Thus, if Congress does not remedy the EVAT themselves, the SC may come out with its decision ahead on the issue, Concepcion said.

Concepcion acknowledged that without a workable EVAT, there could be "dire consequences" for the economy.

These consequences include a rapid peso deterioration, a credit downgrade which would cost the country billions of pesos in additional debt servicing and loss of investor confidence.

The adverse economic consequence of not having a workable EVAT, combined with the already uneasy political situation, Concepcion warned, "may create a tinderbox of horrific potential."

In a related development, Concepcion expressed his support for a proposed " one final tax amnesty."

The proposed tax amnesty would involve the filing by all taxpayers of a statement of assets and liabilities (SAL).

Based on the SAL, taxpayers could file a tax return using an amnesty rate of between 20 percent and 25 percent.

Those who avail of the tax amnesty, Concepcion said, would be exempt from tax investigation.

The proposed tax amnesty, Concepcion said, would help expand the taxable tax base as virtually all the assets of the entire nation would be the basis of determining if correct taxes are paid and the determination of the inheritance tax on the estate of the deceased.