No price increases from EVAT during holidays

The government assured yesterday no increases in transport fares and prices of basic commodities would occur during the holiday season with the implementation of the expanded value added tax (EVAT) law.

Energy Undersecretary Mel Ocampo said the Land Transportation Franchising and Regulatory Board (LTFRB) has already factored in the EVAT implementation on fuel products when it granted the fare hike petition of transport groups.

Trade and Industry Secretary Zeny Maglaya likewise stressed most basic commodities are still exempt from the EVAT with the Department of Trade and Industry strictly monitoring the prices of basic commodities in case unscrupulous traders try to take advantage of the situation.

Finance Undersecretary Noel Bonoan said they have launched a nationwide information drive to answer frequently asked questions about the effects of the EVAT law on basic commodities and services.

On Sept. 1, the Supreme Court upheld the constitutionality of the EVAT law, which was touted as the cornerstone of the government’s efforts to escape a looming fiscal crisis.

The High Tribunal ruled that Republic Act 9337 or the EVAT law was legal "in its entirety," but has not yet lifted the two-month-old temporary restraining order (TRO) against the implementation of the controversial tax measure.

The court said the 15-day freeze on the EVAT implementation will remain to allow the petitioners a chance to appeal the decision and present new arguments.

The law expands the VAT coverage to include electricity, fuel and transport, among other previously exempt sectors.

Congress gave the President the standby authority to raise the tax rate to 12 percent from the present 10 percent in January under certain conditions.

The revenue measure also raises the corporate income tax from its current 32 percent to 35 percent for a three-year period; it brings the rate back down to 30 percent after that time.

The government had claimed it was losing P130 million a day in unrealized revenues following the TRO.

The EVAT law took effect July 1, but the SC issued a TRO hours later after petroleum dealers and opposition lawmakers questioned the standby authority granted by Congress to President Arroyo to increase the rate next year.

The high court ruled the standby authority provision of RA 9337, which grants the President, upon the recommendation of the secretary of finance, the power to raise the VAT rate from 10 percent to 12 percent effective Jan. 1, 2006, "is not a delegation of power" but a ministerial duty for Mrs. Arroyo to immediately impose the 12 percent rate upon the existence of any of the conditions specified by Congress.

The government hopes the EVAT measure will raise enough fresh revenues to balance the national budget by 2010.

By removing most exemptions, the EVAT law increases the number of products and services subject to a 10-percent charge. The controversial tax measure has been hailed as a cure to many of the country’s economic ills, including a gaping budget deficit, but dreaded by most Filipinos already hard-hit by soaring oil prices.

It is expected to generate additional revenues of over a billion pesos by next year, part of which would go to financing the national deficit and to paying off outstanding debts.