Gloria rejects calls to scrap VAT on oil

Says painful measures cushion impact of price surge


PRESIDENT Arroyo yesterday virtually rejected calls to scrap or lower the 12 percent value-added tax on oil as she said her administration is sticking by its fiscal reform policies.

These policies, she said, have been acknowledged by the international financial community and have helped cushion the impact of rising prices of fuel and rice.

She said while her fiscal programs include unpopular and painful measures like the VAT, these are helping generate revenues for infrastructure and social reform programs and preparing the country to face the global fuel and food crisis.

Arroyo has been saying excess revenues from VAT are funding the P500 one-time subsidy for “lifeline” electricity consumers and other pro-poor programs.

“Because we have been prepared for it, we have been able to shield our nation from the worst effects of food and fuel crisis worldwide. Had we acted differently, or not acted at all, all would be lost today,” she said.

“The world crisis did not catch us unprepared or without reserves. We took hard decisions several years ago – hard on our people, unpopular with big business but good for the country as events have shown beyond any doubt. These hard decisions were intended to raise new revenues, large amounts of new revenues,” she added.

With the fiscal reforms, Arroyo also said, the government can address day to day problems brought about by world food and fuel crisis, and at the same time continue to invest in the country’s future.

The President said the international finance community agrees with that the Philippines is making progress, as shown by the stable and positive outlook given by credit rating firms like Moody’s, Standard and Poor and Fitch.

“We are happy that the World Competitive Yearbook, the latest edition, shows a remarkable improvement of five notches on the rating of the Philippines,” she also said.

In the WCY of Switzerland’s Institute of Management Development, the Philippines occupies the 40th spot out of 55 nations surveyed, an improvement from last year’s 45th place.

The President acknowledged Filipinos living and working overseas, who she said helped fuel economic growth.

“Your remittances make up the bulk of the record-setting $16billion that we received in remittances in 2007,” she said.

Because of the remittances, the gross national product has remained at 7 percent even if the gross domestic product stood at 5.2 percent, she said.

Arroyo said it is also urgent that the Philippines now take greater control of its destiny by becoming more self reliant and self sufficient in light of the rapid rise in food and fuel prices in the world.

“When it comes to food and fuel, definitely we cannot run the risk of no one selling us both unless we pay impossible prices,” she said.


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