, February 28, 2005
(STAR) (AFP) - President Gloria Arroyo on Monday urged Congress to pass a key tax measure as well as the 2005 national budget to avoid a potential debt crisis for the Philippines in the near future.

"The clock is ticking. There's no time to waste," she said in a speech to Filipino businessmen less than two weeks after the country suffered a double-notch downgrade of its sovereign credit ratings due to its debt burden. Manila needs to borrow four billion dollars this year to fill the financing gap and the downgrades, by Moody's Investors Service, raised the cost of those borrowings.

Congress has dragged its foot on the 907.6 billion-peso (16.59 billion-US dollar) 2005 budget as well as most of the components of a package of tax reforms proposed by Arroyo last year aimed at increasing annual revenues by 80 billion pesos (1.46 billion dollars). Arroyo said Monday she wants the legislature to pass the budget bill by March, noting that 2003 was the last time it managed to pass a national budget bill. "Passing a national budget for the first time in two years is a declaration of independence from the politics of denial," she said.

"It will send a signal to our people and to investors that we're in control of our own future."

Arroyo also called on Congress to swiftly pass a tax proposal raising the value added tax (VAT) by two percentage points to 11 percent, the most important of the revenue package measures she handed to the legislature last year. So far, the legislature has passed a law raising excise taxes on tobacco and liquor products, and one that would set performance targets on revenue collectors who could be fired for failing to meet them.

"Those who oppose the national budget and those who oppose the VAT (increase) will set this nation back and put us on a collision course with fiscal and economic responsibility," Arroyo said Monday.

"They will hold this nation hostage to a future devoid of hope by putting petty politics ahead of the national good."

í05 budget passed in 15 days ó JDV By Paolo Romero The Philippine Star 02/28/2005

Assuring the public that last yearís budget will not be re-enacted, Speaker Jose de Venecia said yesterday that the 2005 General Appropriations Act will be ratified by Congress and signed into law by President Arroyo in the next 15 days.

"Under no circumstances will we allow a re-enactment of the budget," De Venecia said in a statement after he informed the President the other day that the new budget would be approved in the next two weeks.

He said the country will have a "new integrated two-part VAT (value added tax) law and a new national budget" before Congress goes on recess March 18. He issued the statement after opposition Sen. Aquilino Pimentel Jr. alleged that the House of Representatives was holding the 2005 budget bill hostage in exchange for the passage of tax bills and more pork allocations. De Venecia dismissed Pimentelís allegations and said "there should be statesmanship in inter-chamber relations."

He and Camarines Sur Rep. Rolando Andaya Jr., chairman of the committee on appropriations, said the House approved on third reading the proposed 2005 budget bill in early December last year before the Christmas break and saw no reason to further delay its approval. Andaya said senators complaining about the delay in the approval of the 2005 national budget are "always seeing ghosts and imputing a political motive where clearly there is none."

"The speculations that the national budget is being used as a political football have no basis at all. Nothing is being held hostage as none has been ransomed," he said.

Andaya called on senators to "rise to the level of statesmanship once in a while" and to "stop belly-aching like little boys and blaming other people." He also said the bicameral conference committee can begin its work on Wednesday, a day after the House is expected to approve the bill lifting VAT exemptions, the second phase of the VAT legislation being hammered out in Congress.

"The Senate should bear with us for a few daysí delay on a single bill as we have been with them for thousands of bills that have been interred in the legislative graveyard that is the Senate," Andaya said.

He said the House needs the presence of its members in the marathon sessions to ensure a quorum for the approval of the VAT exemption bill, projected to generate P40 billion in fresh revenues. The chamber earlier approved the bill increasing the VAT from 10 percent to 12 percent. He added said every vote on the second VAT bill counts and that includes the 25 members of the House contingent to the bicameral conference on the 2005 budget bill. Andaya said the passage of the second VAT bill is being keenly awaited by the international community as an indication of the governmentís serious intent in pursuing urgent financial reforms to address its huge budget deficit.

The House resumes plenary action on the VAT exemption bill today and is expected to approve the measure on third reading by midnight. Other House leaders bristled at Pimentelís allegations, which they said were unfair and untrue.

House Majority Leader Prospero Nograles and Bulacan Rep. Wilhelmino Sy-Alvarado, vice chairman of the committee on appropriations, said as early as last year, the President and De Venecia agreed to prioritize the administrationís tax bills to ensure enough funding for programmed appropriations this year.

Nograles and Alvarado also stressed the House cannot be blamed for the delayed ratification of the 2005 budget bill since it worked overtime to pass the measure last year to give senators enough time to act on it. As for the issue of pork barrel funds, Nograles said this did not delay the budget billís approval since the issue was adequately addressed during the House deliberations on the budget bill. Alvarado said congressmen have always respected the Senateís independence.

"We never pressured the Senate to pass any of the tax measures we have forwarded so far, including the (VAT) hike proposal. Itís untrue we are taking the budget bill as hostage in exchange for the passage of the tax measures," he said.

Alvarado said lawmakers support the tax bills "not for our own vested interests. The tax bills are our major contribution in easing the budget deficit and ensuring funding of the development projects of the President as spelled out in the 2005 budget bill."

Reported by: Sol Jose Vanzi

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