MANILA, September 9, 2004 (STAR) By Ted Torres - Finance Secretary Juanita Amatong said yesterday the government will offer tax amnesty to tax evaders and cheats as a final offer of reconciliation with the government.

"For the final, final, final time we will offer the final tax amnesty," she said amid reports that the grant of a tax amnesty would be scrapped as part of revenue-generating measures the government is mulling to avert a fiscal crisis.

At a press briefing, Amatong admitted that the amnesty program was the only way the government could accumulate information on delinquent tax payers.

"The rationale behind our final, final, final (offer) for a tax amnesty is to develop a database," she said.

Despite offering a tax amnesty 15 times in the last 13 years, the government has failed to raise the expected revenues from known or consistent tax evaders.

At the same press briefing, Amatong also disclosed that the national government would do everything to persuade Congress to pass a law that would increase the 10 percent value-added tax (VAT) in two tranches, to 12 percent and then to 14 percent.

"Scrapping the VAT is not an option," Amatong said in reaction to threats by some lawmakers to block new tax measures.

The lawmakers indicated that they preferred increasing or expanding existing tax measures rather than legislating new ones as proposed by President Arroyo.

The tax measures requiring legislation include the indexation of the excise tax on sin products, the hike in the excise tax on petroleum products and telecommunications, a shift from net to gross income tax system and lateral attrition system.

If legislated, these tax measures are estimated to earn for the government almost P80 billion in revenues a year.

Businessmen, however, said that the excise tax on petroleum products is inflationary and counterproductive but they favor taxes on the so-called "sin" products as well as taxes on the short message system (SMS) or text messaging.

The businessmen branded the tax amnesty as "immoral."

Nonetheless, Amatong said if the government fails to get Congressí cooperation, it could implement some of the proposed tax measures "through administrative measures."

These include increasing the dividend take from government- owned and controlled corporations and government financial institutions, complemented by further streamlining. The national government receives 40 to 50 percent of the annual gross income of GOCCs and GFIs.

Amatong also disclosed yesterday that the government wants to remove tax incentives for cooperatives as she said that annual foregone revenues from these entities reached P49 billion. There are 124 other laws offering tax and fiscal incentives which may fall under the finance departmentís scrutiny, Amatong said.

Meanwhile, finance department officials admitted that there remains a strong sense of skepticism in the ranks of 94 foreign (Europe and Asia) and local investors regarding the ability of the Arroyo administration to improve tax take.

The skepticism stems from the inability of previous and present administrations to improve tax collection and other revenue streams.

"We are being given the benefit of the doubt by the investors, but we are still unsure of their willingness (to make significant investments)," the officials said.

Reported by: Sol Jose Vanzi

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