‘Senate may reject new taxes’

The Senate is likely to reject new tax proposals that finance, budget and economic managers of the Arroyo administration plan to submit to Congress to raise additional funds to reduce the huge budget deficit this year.

"I think new taxes are indefensible," Sen. Ralph Recto, ways and means committee chairman, said yesterday. His panel wields the power of life and death over tax measures.

"At a time when the costs of basic services are rising, we will have difficulty selling tax proposals to the public," he said.

Recto said besides fuel prices, the cost of electricity could soon rise in the wake of the petition of the state-run National Power Corp. (Napocor) with the Energy Regulatory Commission for an adjustment of P1.86 per kilowatt-hour.

He pointed out that the adjustment being sought is intended to cover increased cost of operations only and does not include provisions for the payment of Napocor’s P600-billion indebtedness which the national government has assumed.

"The cost of power could soon rise, along with the cost of water. Fuel prices are rising, fares are rising. In the wake of all these increases, how can we convince our people to pay more taxes?" he asked.

Recto revealed that among the administration’s tax proposals, the only one that the Senate may consider is the suggestion to index the excise tax on the so-called "sin" products (beer, liquor, cigarettes, and other alcohol and tobacco products) on inflation.

He said since the rates were fixed years ago, they had not been adjusted and the government has not been benefiting from the increase in the retail prices of these products occasioned by inflation.

He estimated that when the rates are indexed on inflation, the net effect would be an increase in retail prices of about 22 percent.

Actually, the indexation proposal was submitted to the last Congress at the start of the Arroyo administration in 2001 by then Finance Secretary Jose Isidro Camacho.

It gathered dust in the House of Representatives. When Camacho resigned from President Arroyo’s Cabinet, he said he felt that Mrs. Arroyo did not actively push for the enactment of his proposal through her allies in Congress.— With Jose Rodel Clapano