Deputy Speaker Gerry Salappudin and Antique Rep. Exequiel Javier, ways and means committee vice chairman, said the Senate’s delay spoiled the peso’s six-day rally against the American dollar.
The local currency had appreciated to a 20-month high of P53.13 against the dollar before falling to P54.13 on Tuesday on fears Congress would not be able to pass the VAT bill before adjourning for a three-week Lenten break this weekend.
"We hope the Senate finally approves the measure (because) the business community has long awaited its passage as part of the needed revenue reforms for fiscal discipline. It will greatly boost revenue collections and cut the budget deficit," Javier said.
For his part, Salappudin said the passage of the VAT bill "will certainly strengthen the peso and enliven the financial markets."
The Senate and the House are planning to extend their session until early next week in order to hold a bicameral conference on the VAT bill and finally approve a version of it — that is, if senators pass their version today, or at the latest, tomorrow.
Senators, however, were reported last night to have reached an agreement for a single rate for the VAT reform bill, but they have not for either increasing it from 10 to 12 percent or retaining the current VAT rates.
Opposition senators are urging their colleagues not to rush through a measure that could make life harder for the entire population without carefully weighing its economic repercussions.
The House version of VAT, according to Tarlac Rep. Jesli Lapus, ways and means committee chairman, would raise P91 billion in additional revenues, P11 billion more than the target of P80 billion.
The Senate version, based on Lapus’ calculations, would bring in P65.5 billion. Senators have apparently limited themselves to aiming for P80 billion as leaders of Congress and President Arroyo had agreed in a Legislative-Executive Development Advisory Council meeting. The P15 billion "balance" would come from increased taxes on so-called "sin" products like cigarettes and liquor, which were approved in January.
If the projected P15-billion increase from sin taxes were included, the House version would overshoot the P80-billion goal by P26 billion.
This has prompted Minority Leader Francis Escudero to complain that, in effect, the House wants taxpayers to pay P26 billion more than necessary to stabilize the country’s fiscal situation.
"Why should we ask our people to pay more when they are already reeling from high fuel prices, transport fares and the rising cost of goods, particularly staples?" he asked.
Escudero, who had voted against the VAT bill together with minority members, said it is not fair that people be asked to contribute more than what is needed to help the nation.
About P50 billion of the P91 billion that Lapus estimates would be raised under the House version would come from the two-percentage point increase in VAT, from 10 percent to 12 percent.
On the other hand, the bulk of the P65.5 billion that the Senate version aims for would come from the lifting of VAT exemptions. Senators are for keeping the rate at 10 percent and for a universal application of the tax. — Jess Diaz, Christina Mendez