Commentary: Tough fiscal reforms account for favorable RP economy
by EA Abasquez
San Jose, Antique (24 April) -- A flourish of fresh and favorable outlook on the Philippine Economy marked by lower interest and inflation rate has resulted in renewed investor confidence and a stronger peso, President Gloria Macapagal Arroyo said.
In a round table discussion with National Economic and Development Authority (NEDA) Director General Romulo Neri, one of her trusted economic managers, the President said this flourish was brought about by the tough decisions to implement radical, fiscal reforms, most notably the Expanded Value Added Tax (E-VAT) Law or Republic Act No. 9344. The law increased the rate of VAT imposed on goods and services from previous ten percent to 12 percent. High impact luxury and previously VAT exempt goods such as fuel and sports utility vehicles more commonly known as SUVs are now subject to tax.
Information obtained from the Bureau of Internal Revenue (BIR) here showed that VAT collection for March amounted to P1,841,635.05 or an increase of P432,855.92 equivalent to 82.50 percent compared to last year's VAT collection of P1,783,741.35.
From other sources like income taxes, percentage taxes, excise taxes and other taxes, BIR collected P13,352,350.25 making a total collection of P15,193,193,985.30 against last year's collection for the same month of P14,295,845.66 or an increase of P898,139.64.
Because of the E-VAT law, the President said, the government was able to raise important cash resources that were used to fund vital infrastructure, health and education projects without the need of external borrowing from financial institutions.
The government was also able to provide soft loans to Filipino entrepreneurs who availed themselves of the grants given to small and medium enterprises (SMEs) to put up their own businesses.
All these activities did not go unnoticed as the International Monetary Fund (IMP) forecast recently that the Philippines' economic growth would be higher than average among its neighboring countries. (PIA) [top]