Peso to gain further strength with EVAT, lawmakers say

The performance of the peso, which posted an over three-year high Friday, will be stronger once the government collects fresh revenue from the implementation of the expanded value-added tax (EVAT) law, congressmen said yesterday.

"It’s not sheer luck that the peso surged. It is no fluke but a result of painstaking reforms and sacrifices of everyone. We will soon reap the fruit of our sacrifices," Manila Rep. Ernesto Nieva said in a statement.

He said he has "no doubt" that the full implementation of the EVAT, which increased by two percentage points the previous tax rate of 10 percent, was the "reason for the peso surge."

"It inspired newfound-confidence in the financial market which remains bullish on expectations of better government fiscal position this year, which could lead to a potential sovereign credit ratings upgrade," Nieva said.

He also said President Arroyo’s "decisive leadership" should be credited for the peso surge.

"The President sacrificed her popularity for the nation’s interest. There were those who complained but she was firm in implementing the law," he said.

In the same statement, Nieva and Parañaque Rep. Eduardo Zialcita lauded the peso’s performance and expressed confidence that the best is yet to come, "depending on the government’s political will to sustain the EVAT implementation, resolve tax leaks and collect as much as it can.

"The sustained peso momentum is a result of painstaking reforms and sacrifices of everyone and the challenge now is to ensure that the EVAT’s benefits trickle down to the poorest of the people," they said.

Despite the peso’s strengthened position, Zialcita said "government should remain focused on the proper implementation of its fiscal and governance reforms to encourage investors’ confidence.

"It’s too early for us to celebrate because the success of the EVAT remains to be seen. We have yet to see our collection agencies deliver the P85 billion from EVAT to ease the deficit and provide more social services," he added.

Zialcita said the government should not be complacent in "pursuing legislative and administrative measures to correct the structural defects in our tax system and generate more earnings or savings."

He urged the people to be more patient, as the government is preparing to provide them with more and better social services through additional revenues from EVAT and other fiscal reform measures.

"Economic development will be superficial if its benefits are only enjoyed by the wealthy few. The poorest can be assured of more educational opportunities, employment, health services if government is able to raise the much-needed revenues to fund its agenda," Zialcita said.