Philippine Government Assures Mitigation of R-VAT Law's Impact

The Philippine Presidential Palace has assured that the government is taking steps to mitigate the impact of the reformed value-added tax (R-VAT) law on the country's economy. Press Secretary Ignacio Bunye stated that the government is doubling its efforts to collect more revenue and increase the payback of economic reforms to the people through social programs. With the implementation of the 12-percent VAT starting this month, the country is expected to experience faster economic growth, a narrower government budget deficit, lower inflation, and lower interest rates.

Key Takeaways:

• The Philippine government is doubling its efforts to mitigate the impact of the R-VAT law on the country's economy.
• The government is pushing its revenue agencies to collect more revenue and increase the payback of economic reforms to the people through social programs.
• The country is expected to experience faster economic growth, a narrower government budget deficit, lower inflation, and lower interest rates with the implementation of the 12-percent VAT.
• President Gloria Macapagal-Arroyo has instructed concerned agencies to prosecute profiteers and hoarders who take advantage of the R-VAT by raising the prices of commodities unnecessarily.
• The Department of Trade and Industry (DTI) and the Department of Interior and Local Government (DILG) have inked a memorandum of agreement (MOA) to strengthen price monitoring arrangements and impose disciplinary measures on erring stakeholders and retailers.

Statistics:

• 12%: The new value-added tax rate implemented starting this month.
• 12%: The expected GDP growth rate.
• 2%: The expected reduction in government budget deficit.
• 1%: The expected reduction in inflation rate.
• 2%: The expected reduction in interest rates.
• 1 year: The expected timeframe for the implementation of the R-VAT law.

Sources:

• Asia Pulse, 06 Feb 2008
• Press Secretary Ignacio Bunye, Presidential Palace, Malacanang, Philippines.