Gov’t closely monitoring prices

Government agencies have started closely monitoring prices of basic commodities as the Department of Finance (DOF) is expected to formally recommend to President Arroyo next week that the expanded value-added tax (EVAT) rate be increased from 10 percent to 12 percent in February.

Trade Secretary Peter Favila said the move is aimed at thwarting any undue price increases that may be triggered by the higher VAT rate.

He said the Department of Trade and Industry (DTI), the DOF and other agencies, including the Office of Vice President Noli de Castro, have begun expanding and coordinating their efforts to make price monitoring more effective.

"We anticipate a psychological reaction to the (EVAT rate) increase when it is announced and this is where we will intensively monitor prices. Vice President De Castro already called to firm up our schedules for visitations (in markets and stores) and to make sure our mitigation measures are in place," Favila told reporters.

He said the DTI and DOF have been conducting weekly simulations to determine the true level of prices when the EVAT is increased.

The VAT Reform Law gives the President authority to increase the tax rate to 12 percent this year.

Favila said despite the expected increase in tax rate, prices are not expected to rise significantly because of the current stability of crude oil prices in the world market and the strong peso vis-à-vis the US dollar.

Favila said the imposition of the VAT on previously exempt goods and services did not cause a drastic increase in prices as earlier feared.

The DOF had earlier assured the public of regular updates on how revenues from the EVAT are being used.

Finance Secretary Margarito Teves said his office is currently working with the Department of Budget and Management (DBM) to craft a reporting mechanism that could address the public’s concern on the utilization of EVAT revenues.

"We will work closely with the DBM to develop reporting mechanisms on the utilization of EVAT proceeds to engender strong public support by institutionalizing transparency and accountability," Teves said the other day.

A comprehensive action plan is also in the works to enhance the revenue collection efficiency of the Bureau of Internal Revenue and the Bureau of Customs. — Paolo Romero