NEWSFLASH

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ESTRADA STUDYING REDUCED BUSINESS TAXES

Manila, May 29, 1998 - The Estrada administration will review all tax laws including the Comprehensive Tax Reform Program for possible reduction of business taxes, according to incoming Finance Secretary Edgardo Espiritu.

He told reporters that the incoming government will review the tariff structures of its neighbors in Asia to find levels appropriate for the Philippines without jeopardizing earlier commitments set under the World Trade Organization.

Of particular focus is the value added tax or VAT which imposes a broad 10-percent tax on sale of goods and services. He said the computation of taxes due under the VAT system has not been very clear "people find it hard to understand"

The incoming administration has also determined that the Philippines "has one of the highest tax rates in the world" such that certain amendments or adjustments have to be made.

"The higher tax rates have become a disincentive to pay the proper tax due the government because compliance will mean that one will have to go out of business," Espiritu said.

The rates, therefore, "must be reduced to encourage people to pay and for government to generate more taxes overall," he explained.

Among other changes which the new government will pursue is the proposed removal of the salary standardization law which effectively denies government corporations the ability to hire the best people for its specialized services," the official said.

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