MANILA,  July 23, 2004 (STAR) President Arroyo announced yesterday she would endorse eight tax measures to the incoming 13th Congress in a bid to generate P80 billion in revenues for the cash-strapped government.

Among the eight tax proposals is the repeal of the value-added tax (VAT), a law that Mrs. Arroyo herself authored and sponsored when she was still a senator during the 10th Congress.

The seven other tax bills propose a shift to gross income taxation from the present taxing of net income; a tax on windfall profits of telecommunications companies; indexing of "sin" taxes on alcohol, tobacco and petroleum products; rationalization of fiscal incentives; targeted tax amnesty, and the creation of a performance-driven system for revenue-generating agencies.

The President also plans to implement changes in other areas, including an increase in fees and charges collected by government agencies, an increase in the import duty on petroleum products, and "capturing more of the revenue potentials" of selected government-owned and controlled corporations.

Mrs. Arroyo said she has started some of these administrative changes by issuing executive orders to transfer the supervision of the Philippine Amusement and Gaming Corp., the Cooperative Development Authority, and the Public Estates Authority from the Office of the President to the Department of Finance.

The President said these administrative reform measures alone can generate more than P100 billion in savings for the government.

Mrs. Arroyo formally presented the eight tax proposals and her administrative reform plans to reduce the government’s increasing budget deficit — projected to hit P197 billion this year — at a joint business luncheon meeting held yesterday at the Makati Shangri-La Hotel.

"It will require painful choices in insisting on the highest performance from the government officials but it will also call on the wealthy to pay more taxes, and it will demand the resolve of the nation to tighten our belts as we invest in vital infrastructure necessary to create a stronger nation today and for generations to come," Mrs. Arroyo said.

The President said "it is time to bite the bullet and take fundamental action on the economy... We don’t have the luxury of time. We must move forward by making the tough choices, or slip backwards into mediocrity."

Mrs. Arroyo, an economist, did not elaborate on the eight proposed tax measures, including a program she intends to replace the VAT system with, except to say it will be "a system that is simpler to administer and increases compliance."

Mrs. Arroyo disclosed that the tax proposals are part of a five-point legislative package she will spell out when she delivers her state of the nation address (SONA) on Monday.

Although the entire ballroom of the hotel was filled with Filipino and foreign business executives, the President’s announcement of the eight tax proposals was met with silence.

Mrs. Arroyo said she intends to conduct more "public interest" consultations in the weeks ahead to explain each of these five legislative packages and receive input from opposition leaders in Congress.

"While the consultative process is wide open, it is not open-ended. We must and we will move quickly to involve the best minds and best ideas from (administration and opposition lawmakers), to build a package that will move the nation forward," she said, adding that she "will not allow infighting to derail legislation for the sake of scoring political points."

In a press briefing after the President’s speech yesterday, Trade Secretary Cesar Purisima, who heads Mrs. Arroyo’s economic team, explained they proposed the repeal of the VAT law because the revenue base of this tax has been eroded by many exemptions passed by Congress.

The President said these tax proposals were a "preview" of her economic plans.

"I am here to underscore the notion that the economy must be pulled by the twin horses of market power and political leadership, and it is not a matter of which comes first," she said.

Mrs. Arroyo cited that in 2003, the country’s gross domestic product posted a 4.5 percent growth.

"And we can achieve a five percent growth this year... if we are successful in getting congressional, business and public support for our economic reform agenda and hopefully move us to a stage where we can achieve seven percent growth for seven years, because that is what would bring us to sustainable growth," she said.

Meanwhile, members of the Philippine business community have put up a "fund for good governance" to finance anti-corruption projects selected by an advisory committee.

Businessman Ramon del Rosario Jr. announced the creation of the fund during the joint business meeting, saying a percentage of the earnings of participating corporations will bankroll the anti-corruption program.

Some of these projects, according to Del Rosario, include tracking the progress of public service projects, helping reform the Bureau of Internal Revenue and Bureau of Customs, simplifying processes in local government units and other frontline services of national agencies, and assisting in the prosecution of major tax evasion and smuggling cases.

The program is "clearly a very ambitious undertaking, but we believe it is high time we go beyond simply complaining about corruption, and begin doing something concrete," he said. — Marichu Villanueva, Marianne Go

Reported by: Sol Jose Vanzi

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