ASEAN KEY DESTINATIONS
June 1, 2008
The Philippine government said Friday it will not lift the expanded value added tax (EVAT) on petroleum products as the scrapping would reverse the fiscal and economic gains brought about by the implementation of economic reforms.
An EVAT Law, sign by President Arroyo in May 2005, was eyed to help shore up the government's fiscal position and reverse the credit rating downgrade certain rating agencies have given the Philippines. It granted the President a "standby authority" to raise the tax rate from 10 percent to 12 percent under certain conditions.
The implementation of economic reforms, among which is the EVAT, has "helped increase the confidence of the international financial community" in the Philippines, said Ignacio R. Bunye, Press Secretary and Presidential Spokesman of the Philippines in a statement.
He cited, among others, the country's improved credit ratings, strong peso, reduction of the debt service was significantly reduced as a result of the implementation of EVAT.
Bunye said if the 12 percent EVAT on petroleum products is scrapped, "the reverse will happen."
President Gloria Macapagal-Arroyo said earlier that 4 billion pesos (91.4 million U.S. dollars) of the expected 18-billion peso (411.4 million dollars) proceeds from the EVAT on petroleum products would be returned to the people in the form of cash transfer loans and scholarships.
Several groups have been calling for the scrapping of the EVAT on oil products to cushion the impact of spiraling oil prices in the world market.