Passing VAT bill patriotic, Palace tells Congress

Malacañang appealed yesterday to senators’ "patriotism" in urging them to pass the expanded value-added tax (VAT) bill during an upcoming three-day special session of Congress called by President Arroyo.

"We are confident that most of our lawmakers will no longer need convincing of the paramount importance of the VAT bill for the national interest," said Press Secretary Ignacio Bunye. "We continue to have faith in the collective patriotism of our legislators."

The Palace is confident that Congress "will pass a VAT that will be satisfactory and will meet the demands of the country," he added.

Arroyo ally Speaker Jose de Venecia Jr. prodded the Senate yesterday to pass the VAT bills, saying they are "absolutely necessary for national survival."

"The alternative to the non-approval of the expanded VAT is continuing economic deterioration to debt default and financial collapse," he said.

Senate President Franklin Drilon, another main Arroyo ally, said his colleagues will "decide on a VAT bill based on what they believe is in the best interest of the nation."

The President has called Congress to a special session to approve the contentious VAT measure. The session will open tomorrow.

Local officials also urged the Senate to pass the VAT bills during the special session. "Any delay or inaction on the part of the Senate will result in unimaginable deterioration of social services like health and even basic education," said Eastern Samar Gov. Ben Evardone, spokesman for the Union of Local Authorities of the Philippines, the umbrella organization of the leagues of provinces, cities, municipalities and barangays.

Earlier, the House passed two versions of the bill. The Senate, however, is not expected to rush its approval.

House Minority Leader and Sorsogon Rep. Francis Escudero said senators should consider the bills very carefully.

"If, indeed, they are our last hope of improving the nation’s fiscal condition as UP economists claim, then careful, serious and thorough study and deliberation should go into their passage. Otherwise, they will be half-baked like the previous tax bills that we have passed," he said.

Several economics experts from the University of the Philippines have warned of an economic collapse if Congress fails to pass the VAT bills. The same experts earlier warned of a fiscal crisis unless the government reins in the budget deficit.

House Assistant Majority Leader and Zamboanga del Sur Rep. Antonio Cerilles said the experts’ warning should serve as an eye opener for senators.

"If they wish, we can ask our counterparts in the Senate to be present for maybe one hour to approve the House VAT hike bill en toto then go back to vacation," he said in a press statement.

The House has approved two VAT measures: one increasing the current 10-percent rate to 12 percent, and the other lifting the VAT-exempt status of certain goods and services.

But the Senate wants to keep eight items on the VAT-exempt list, including domestic plane and ship ticket sales and purchases and leases of aircraft parts.

The chamber is also inclined to reject the rate increase, opting instead for a wider application of the tax.

At the risk of breaking inter-chamber courtesy, De Venecia said the expanded VAT would "end the fiscal crisis, prevent an Argentina-type financial meltdown and make public funds available for creating jobs and building roads, hospitals, schools and irrigation systems nationwide."

Former Batanes congressman and now Education Secretary Florencio Abad joined De Venecia in pressuring senators to pass the vital measure.

In a statement, Abad said while he appreciated the Senate’s decision to keep the P135-billion budget for his department this year, funding for it could be derailed if the VAT bills are not approved.

"We would like to remind our friends in the Senate that in about two months’ time, we will have to prepare for the next enrollment period which is expected to swell the student population by several million more," he said.

"Our program for this school year calls for the hiring of at least 7,000 teachers, representing only some 30 percent of what we really need… to attain a decent teacher-to-student ratio," Abad said.

His department won’t be able to respond to the growing educational needs of the population without the necessary funds, he said.

Escudero said the Senate — assuming it can muster a quorum — would not be able to meet if there is no quorum in the House.

He doubted whether the House could raise the needed attendance since most of his colleagues are either still on vacation or meeting with constituents.

"A session, whether regular or special, cannot start unless each chamber musters the needed quorum," Escudero said.

The Senate vote on the VAT bill could swing on how the chamber decides on a provision to lift the power industry’s VAT exemption.

Senators remain deeply divided over whether or not to lift the exemption. Those opposed argue it could drive up prices and hurt businesses. Sen. Ralph Recto, whose committee on ways and means is handling the VAT legislation, said he sees no compromise. – With Jess Diaz, Marvin Sy