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Corporate tax hike seen to hit investments — PCCI |
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By BERNIE CAHILES-MAGKILAT
The Manila Bulletin 04/19/2005 Despite the support shown by the business community on tax reform measures, the Philippine Chamber of Commerce and Industry is not amenable on the Senate’s version of the corporate VAT increase from 32 percent to 35 percent. PCCI President Donald Dee stressed that increasing the corporate VAT will affect investments inflow into the country. "The increased corporate tax will create a very bad impression on investors," he pointed out saying that "companies might have difficulty in absorbing additional costs. We cannot just adjust the cost or selling price or our goods and services and pass them on to our consumers. Everything has already VAT on it." Dee further said that increased corporate VAT will only double the consumers’ burden of having to pay the series of increases in petroleum products and shoulder the VAT imposed on these products. "I wish we can turn back the time where we can pass everything on to the consumers but times have changed and the market has become very competitive that’s why we cannot just raise prices," he said. The Senate approved on third and final reading last Wednesday night its version of the value-added tax. It retains the 10 percent VAT rate and lifts exemptions on domestic airlines and ships, professionals such as the doctors and lawyers, power and petroleum products. The additional 3 percent corporate VAT will only be until 2009 and the rate reverts to 32 percent because the economy is projected to reverse after four years. Socially-sensitive goods such as tuition fees, books, medicines, and agricultural products such as raw fish, meat, vegetables, and palay, though, remained exempted from VAT. The government has estimated a conservative P50 billion to be generated from the new version of VAT. But government officials said that if collection will be efficient, at least P60 billion can be generated. Dee, however, said that the success of this tax reform measure can still be determined through enforcement of the law and how the money collected will be spent. This way, he said, corruption can be minimized.(BCM) |
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