Arroyo urges speedy VAT bill passage

President Arroyo said yesterday the proposed increase in the value added tax (VAT) to 12 percent and the lifting of its exemptions could raise as much as P60 billion additional revenues for the deficit-strapped government.

Mrs. Arroyo called on Congress to speed up the passage of the proposed VAT bill which seeks to increase the collection of value added taxes from the present 10 to 12 percent.

The President made the appeal to lawmakers following the passage of the Lateral Attrition bill at the end of the three-day special session last Friday.

"Once more, I would like to thank the Senate for the passage of the Lateral Attrition bill, as I anticipate that this will be cleared smoothly through bicameral consensus with the House (of Representatives)," Mrs. Arroyo said.

"I also want to thank the House for beginning consideration of the value added tax measures," she said.

Mrs. Arroyo called a news conference late afternoon yesterday to read a prepared statement before Palace reporters on the issue and to announce the latest executive actions aimed to further raise revenues through administrative measures.

The proposed VAT bill is among the eight measures being pushed by Malacañang for enactment of Congress to raise much needed revenues to cut down the widening budget deficit.

She expressed confidence that the special sessions had served to jumpstart the kind of cooperation she intends to pursue with Congress starting this year.

"As our economic fundamentals run steady on course, I shall continue to look forward to the best working relationship with Congress to serve the people," Mrs. Arroyo said.

"The recently concluded special session notches upward our common determination to put our fiscal house in order," she said.

Mrs. Arroyo also said the new year "marks the will and vigor of the executive-legislative partnership to ride the tide of national hope."

To do its part of raising revenues through non-tax measures, Mrs. Arroyo said Finance Secretary Juanita Amatong made a proposal before the Monetary Board "a measure to prevent tax cheats from being able to avail of credit opportunities," both from the government financial institutions and through the private banking system.

Amatong is the Cabinet representative to the five-man Monetary Board with Bangko Sentral ng Pilipinas (BSP) Gov. Rafael Buenavenura at its chairman.

"This is a proposal to require the borrowers from our banking system to submit audited financial statement which they also submit to the Bureau of Internal Revenue (BIR) before they can avail of a loan from the banking system," Amatong said.

Amatong explained the present system only requires those with unsecured loans to submit certified BIR statements or their income tax returns.

"But now, we will include even those which borrow on secured basis, or those loans secured which have collaterals. will be required to submit audited statements before they cab be allowed to borrow," she said.

Amatong said the Monetary Board would issue within the next few days a circular requiring government financial institutions and private banks to strictly enforce the new regulations as an administrative measure to plug the tax leakages.

Amatong said these administrative reforms have been proven effective in increasing tax collection efficiency like in the higher taxes collected in 2004.

She said the collections of the BIR and the Bureau of Customs are projected to increase by another P10 billion to what were programmed this year.

This would be the result of implementing such administrative reforms, possibly including the lateral attrition law, Amatong said.

Amatong said the consolidated version of the Lateral Attrition bill would be finalized by the bicameral conference committee that would meet tomorrow when Congress resumes its regular session.

Though both legislative chambers achieved the necessary quorum in the first day of the three-day special session, there was hardly anything achieved on the first day as both administration and opposition congressmen debated over the need of holding a special session even as they have already approved four of the eight urgent tax proposals pushed by Malacañang.

Congressmen took up on Friday at the plenary the proposed amendments on the rationalization of tax incentives given under the Board of Investments and the Philippine Export Zone Authority.

The Senate, on the other hand, has yet to take up the four other bills approved by the House.