More special sessions until VAT bill is passed

Will another special session do the trick?

Congress may be in for the long haul as President Arroyo said she would continue to call lawmakers to special sessions until the Palace-endorsed value-added tax (VAT) bill is passed.

"I will just keep calling special sessions until it’s passed," the President, who is pinning her hopes on the passage of the VAT bill to help the government solve its fiscal problems, said in Marawi City yesterday.

Press Secretary Ignacio Bunye said the special session "is a call of duty" for the nation to avoid "fiscal doom."

"We do not want to resort to borrowing anymore to fund our social needs, to build schools and roads and provide electricity to our people," Bunye said.

Most of the additional revenues expected to be generated from new taxes are crucial to the country’s fiscal reform program, he added.

Of the P80 billion needed to solve the fiscal crisis, P50 billion to P70 billion is expected to come from VAT proceeds.

Mrs. Arroyo reportedly dined with Sen. Miriam Defensor-Santiago recently in a bid to convince her to vote for the higher VAT rate, confirming Malacañang’s pressure to speed up passage of the bill.

Santiago admitted to reporters that the President invited her to dinner before the Lenten break last week with the "VAT bill included in the menu."

"You can tell the importance of a bill by the number of times you are invited to dinner at Malacañang," Santiago said.

Before meeting with the President, however, Santiago said she had already reviewed the papers of her economic consultants who had assessed "unanimously" that the VAT is necessary and that VAT exemptions should be lifted.

"It was just a question for them which should come first," Santiago said, emphasizing that it would be "politically calamitous" to impose two new taxes at the same time.

The House approved two VAT measures two months ago — one increasing the rate from 10 percent to 12 percent, and the other lifting VAT exemptions, except for eight products and services — but the Senate has yet to finish its deliberations on the bills.

Early this week, Mrs. Arroyo called for a three-day special session of Congress that started late Wednesday so that lawmakers could tackle the pending controversial VAT bills.

Yesterday, the President also expanded the agenda of the special session of Congress to include four bills in the deliberations — resetting the barangay and Sangguniang Kabataan elections, extending the utilization period of the Agricultural Competitive Enhancement Fund, strengthening the anti-smuggling program, and appropriating funds for the conduct of elections in the Autonomous Region in Muslim Mindanao (ARMM).

It was Speaker Jose de Venecia Jr. who recommended to the President that the special session be expanded so the House could tackle additional bills.

Under the Constitution, the President can prescribe what lawmakers will tackle in a special session but the legislature determines its own agenda in a regular session or when it holds an extra session on its own initiative.

While the House was able to muster a quorum at the start of the special session on Wednesday, fewer than 50 members attended the second day of session yesterday.

The President was nevertheless thankful and said she is confident that "the statesmanship and civic duty of our legislators will prevail."

In the Senate, 14 senators were present during the first day. Senate President Franklin Drilon remain optimistic that they could pass their version of the VAT bill at the end of the special session.

"We will try to finish the interpellations today (Thursday) and start the amendments tomorrow (Friday)," Drilon said.

Senate Majority Leader Francis Pangilinan said the Senate expects to make major headway in the last two days of the session and hopes that both chambers of Congress would finally go into bicameral conference next week.

Opposition Sen. Edgardo Angara, however, was less optimistic about passing the bill in such a short time. He said passage would most likely take place after the resumption of regular session on April 11.

Angara said he expects a battle during the bicameral conference committee hearings since the House and Senate versions of the bill are completely different.

The House wants to raise the VAT from 10 to 12 percent while the Senate wants to keep the rate at 10 percent while lifting most VAT exemptions.

Angara said he believed lifting the exemptions could already muster the necessary revenues for the government but he remained optimistic that a compromise would still be reached during the bicameral hearings.

As this developed, an economic think tank called on Congress to muster its political will and pass the expanded VAT bill to provide the country with the social and physical infrastructure needed for sustained economic growth.

In a manifesto entitled "A Call for Leadership," the Foundation for Economic Freedom Inc. (FEFI) said the 12-percent VAT would improve the country’s fiscal and public debt situation and would make the country less vulnerable to risk of a debt crisis.

Earlier, 11 economics professors from the University of the Philippines warned of a possible collapse of the Philippine economy in two years’ time unless fiscal and economic reforms are put in place. — With Jess Diaz, Christina Mendez, Marvin Sy