Finance dept loses hope on VAT implementation this year
Daxim L. Lucas
Inquirer News Service
TAX collections under the expanded value-added tax (VAT) law for this year will be "negligible" even if the Supreme Court allows it to take effect next week, an official of the Department of Finance said.
Because of this, the government has abandoned the VAT law as the cornerstone of its fiscal policy for the remainder of the year, Finance Undersecretary Emmanuel Bonoan said in a telephone interview.
"It's so delayed that we're no longer counting on it to help us this year," he said.
VAT collection this year may reach only P5 billion even if the Supreme Court affirms the law's provisions next week, Bonoan said.
"We could have earned up to P60 billion if this [the law] was implemented on July 1," he said.
The Supreme Court has given the law's backers another five days to respond to comments made by those opposing it before ruling on the legality of its controversial provisions, including the so-called "no pass-on provision" and the input VAT cap for oil companies.
The government earlier downgraded its expected VAT collections this year to P28 billion from P60 billion because of the delays, but Bonoan said tax authorities would likely miss this figure and that, at best, VAT collections might reach only P5 billion.
Despite the loss of proceeds, he said the national government's budget deficit would fall within its P180-billion target ceiling at the end of the year and possibly be as low as P161 billion.
President Gloria Macapagal-Arroyo has affirmed her support for the VAT law after giving hints of her willingness to see its implementation postponed, Inquirer sources in Congress said.
The President recently met key leaders of the House of Representatives and the Senate to express her support for the VAT law, the sources said.
They said Arroyo assured lawmakers at the meeting that she would not support a proposal of Rep. Jose Salceda to delay the implementation of the controversial law.
They said she made the assurance to clarify the Palace's stand on the issue and to reassure investors that the country was serious in its efforts to put its fiscal house in order. With INQ7.net