According to PCCI president Donald Dee, the two percent increase only has a minimal effect on prices of commodities compared to the long-term gains from the tax.
"The two percent increase is very small compared to the impact to the economy brought about by not only the revenues that will be generated from the increase, but the effect on the international community’s perception of government’s political will in implementing substantial and necessary economic reforms that will help improve the country’s fiscal condition and benefit the economy," Dee said.
The PCCI also supports the government’s priorities for the usage and allocation of the EVAT proceeds.
Relaying on Finance Secretary Margarito Teves’ statement that the bulk of the VAT proceeds would be used to improve social services and infrastructure, and not for debt allocation, Dee noted that government’s priorities are well articulated and defined.
The PCCI expects that the VAT increase will send a strong signal to foreign investors, international credit rating agencies and trading partners that the government is doing its best and making the right decisions to improve the economy.
"We (in business) remain committed to supporting various initiatives that will serve well the interest of the economy and majority of the people. And as in the case of VAT, I still believe that short term sacrifices will bring forth positive and long term gains for our country," Dee said.
Meanwhile, the Employers Confederation of the Philippines (ECOP) yesterday urged Congress to hasten deliberations and enactment of Malacañang’s endorsed bill that restructures the country’s income tax system and raises tax exemptions for low and middle income earners.
ECOP president Rene Y. Soriano said the bill, which has already been approved at the House committee level, would shield wage earners from additional costs amid the two percent adjustment in the VAT rate.
Soriano stressed that strengthening workers’ purchasing power would stimulate spending and generate economic activity.