RP to up ASEAN imports tariffs if sales tax impasse remains
RP to up ASEAN imports tariffs if sales tax impasse remains
Agence France-Presse, Manila
Philippine tariffs on imports from ASEAN countries will rise by a percentage point to compensate for a key sales tax if a legal impasse over its introduction is not resolved, officials said on Thursday.
"If the temporary restraining order is maintained the finance department will lift the tariffs by one percent," Dennis Arroyo, director of the economic planning department's policy planning office, told a news conference.
The Supreme Court suspended the collection of the expanded value-added tax on the day that it came into effect on July 1, denying the government much needed extra revenues.
The sales tax is also the centerpiece of President Gloria Arroyo's efforts to raise annual state revenues by 80 billion pesos (US$1.43 billion) and avoid a looming fiscal crisis.
If implemented, average tariffs on ASEAN imports would rise to six percent, which does not violate any ASEAN trade agreement, Economic Planning Secretary Augusto Santos told the same news conference.
"The increase is not pertaining to our obligations under WTO," Santos said, referring to the World Trade Organization (WTO). "It only pertains to obligations that we have with ASEAN."
The Association of South East Asian Nations (ASEAN) groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam into a 10-nation trading bloc.
The government says it had anticipated raising about half a billion dollars for the last five months of 2005 through the sales tax before the courts acted.
Santos said financing the government's anti-poverty mid-term development program ranks as the government's "greatest challenge".
"The challenge really is to be able to raise additional revenues to finance the development plan," he said, citing the burden of a population growing at a rapid annual rate of 2.36 percent.
Due to limited state revenues, the Philippines only spends an amount equivalent to four percent of its gross domestic product on infrastructure, compared to between eight and nine percent for some of its ASEAN neighbors.
"We are really in a losing position," he added.
The impasse over the sales tax law has triggered credit rating agencies Standard and Poor's, Moody's Investors Service and Fitch Ratings to downgrade their outlook on the Philippines to negative from stable.