MANILA,  September 17, 2004
rroyo to insist on new taxes By Marichu Villanueva - Despite public opposition, President Arroyo insisted yesterday that the government must impose new taxes or else the cash-strapped economy would be on its "death throes" in two years.

For his part, Speaker Jose de Venecia Jr. said the House of Representatives is likely to pass four of the eight tax measures proposed by the President to help address the budget deficit. Mrs. Arroyo said the government needs to raise more than P180 billion and cannot keep borrowing to finance infrastructure development and services. But many Filipinos, saddled by rising unemployment and spiraling costs of fuel and other basic commodities, are opposed to the move, with militant groups warning of protests.

"I am not a stranger to unpopularity, but I cannot shirk the responsibility of prescribing the bitter pill," Mrs. Arroyo said in a speech before the Mindanao Business Conference in Davao City. "We cannot postpone the pain, (it’s) better to have some pain now and feel the gains two years from now than postpone the pain now and have death throes two years from now."

The President said while the government still has access to local and international financial markets for loans, it "does not mean that we should grab all the offers of those who want to lend to us... because every borrowing we make is an increase in our deficit." She said the money would be raised by prudent paring of expenditures, a better plug of financial leaks and a more rational, equitable and effective system of collecting revenues. The President said she was prepared to work with Congress in earmarking new revenue sources for the most vital programs: health, housing and education.

"New revenues are needed to overcome not only our economic challenges... but to overcome the poverty that keeps Filipinos living in substandard conditions that shame us all," she said.

Mrs. Arroyo said she has been reading the small print in the budget annexes of the departments of public works and highways, transportation and communications, and education "to make sure every road, every port, every school building is being spent on in accordance with the highest priorities."

"I am personally leading efforts to cut down government expenditures without reducing the quality and quantity of basic services. We’re making every peso of taxpayers’ money work where it counts most," she said. The President added that by-words in her Cabinet include "fiscal discipline, austerity and rationalization."

A survey released Wednesday by Pulse Asia showed 78 percent of respondents did not believe new taxes were needed as long as the government improved tax collection, although 30 percent were amenable to paying new taxes if it meant better services. The survey questioned 1,200 people from June 22 to July 3. Apparently referring to the survey, Mrs. Arroyo said the one thing she cannot do under the circumstances "is to perpetuate complacency of national survival. On this score, I know the pain of suffering, the brunt of public disappointment and displeasure."

At the same conference, she said her administration’s revenue drive "will be tougher on those who had it easy and on those who already had it tough."

"We are prepared to begin by using friendly persuasion. That is why I am glad that Congress’ first bill that passed the committee report is on (tax) amnesty," the President said.

De Venecia, speaking before the Foreign Correspondents Association of the Philippines, said the House is likely to pass the proposed tax amnesty law, indexing of "sin" taxes on alcohol and tobacco, taxing cellular phone text messages, and the creation of a performance-driven system for revenue-generating agencies. These measures, however, face rough sailing in the Senate, he said.

"I think the four (measures) have a good chance, although I’m sure the senators would immediately say that I’m dreaming," De Venecia said. "But these are survival taxes." He said these four measures can raise P25 billion to P30 billion in revenues.

The four other measures proposed by Malacañang — a two-step increase of the value-added tax; a shift to gross income taxation from the present taxing of net income; rationalization of fiscal incentives; and an excise tax on petroleum products — may be passed next year, De Venecia said.

Presidential Spokesman Ignacio Bunye downplayed the threat of public opposition. "We understand the resistance of many of our people to new taxes in the midst of current difficulties," Bunye said.

"We are confident that as time passes, more and more people will recognize the gravity of the situation and the need for greater sacrifice," he said, adding that the government would not call for any sacrifices that are not gravely needed. Bunye, in an apparent attempt to put a positive spin on the results of the Pulse Asia survey, cited that 30 percent of respondents said they would agree to new or higher taxes "in order to improve the quality of services."

Mrs. Arroyo has warned that the country is already in a "fiscal crisis," echoing warnings by academics that the country risked an Argentina-type debt crisis in a few years due to its high budget deficit and mounting external debt. Bunye stressed the government was making sacrifices as well, for the sake of national interest, and that "more sacrifices shall be demanded from those who can afford it."

He said the executive branch was still working with Congress on a "fair and equitable" tax program and that "we are confident it is in the best interest of the average Filipino in the long term."  Manila hopes to contain this year’s national budget deficit at P197.8 billion, with Mrs. Arroyo promising to wipe it out before her term ends in 2010. The first semester deficit reached P80.1 billion, exceeding a government-set ceiling of P79.6 billion.

Bunye appealed to Filipinos that when they consider the new tax measures, to look at what would be good for the country as a whole. "The government is sick and it needs to take these bitter pills to get well. If not, its health condition would deteriorate," he said. Bunye also called on the media to help the government inform the public about the need for the tax measures.

"It is a matter of explaining and... of invoking our national interest," he said. "We all know that if we won’t undertake any solutions now, in three to five years, our problems would become bigger."

Meanwhile, congressmen downplayed the Pulse Asia survey, saying it was conducted before Mrs. Arroyo’s state of the nation address (SONA) last July 26 where she called for burden-sharing to address the budget deficit and her warning in August regarding the fiscal crisis. House Majority Leader Prospero Nograles and Reps. Eduardo Veloso of Leyte and Mauricio Domogan of Baguio City said the survey was conducted from June 22 to July 3, when the government had not yet raised the urgent need to impose new taxes to address the fiscal crisis.

"The survey had been overtaken by events like the SONA and the fiscal crisis admission by the President, which put national focus on revenue measures like new taxes. In fact, members of Congress have given priority to tax proposals even before the formal submission of the eight tax proposals by Malacañang," Nograles said.

Veloso said the issue now is "which among these taxes should be prioritized and how the government can cushion the impact of these taxes on the less privileged sectors." Domogan cited the need for a heightened information campaign on new taxes to correct misimpressions that it would be the poor who will bear the brunt of new taxes.

"The people should understand that some of the tax proposals will address leakages of collection from the affluent sector and from those who do not pay taxes at all, who have deprived the government of huge revenues in the past. These bills would help provide a better collection system to prevent graft and corruption and correct systemic flaws," he said. — With Paolo Romero, AFP

GMA sends get-well card, flowers to Loi The Philippine Star 09/17/2004

President Arroyo sent yesterday flowers and a get-well-soon card to Sen. Dra. Luisa ‘Loi’ Ejercito, who was resting at the Medical City in Ortigas, Pasig City.

The President sent her best wishes after learning that Ejercito, wife of deposed President Joseph Estrada, collapsed while playing badminton.

It is not known, however, if the President’s flowers and card reached the former First Lady.

Ejercito reportedly collapsed due to exhaustion last Wednesday night in Libis, Quezon City.

Ex-President Estrada said his wife was playing badminton on an empty stomach which caused her to become dizzy. The senator was then playing with daughter Jackie Ejercito-Lopez. – Marichu Villanueva

Reported by: Sol Jose Vanzi

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