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Highlights Of The 100th LEDAC Meeting The President's Opening Statement For her opening statement, the President gave a brief recap of her official trip to advance the nation’s interest with the world leaders at APEC in the coordinated fight against terrorism, to generate investments and to create jobs in the country. The Philippines was elected upon nomination of the United States to be the chairman of the APEC Counter Terrorism Task Force. Her Excellency discussed efforts to promote investments. The President explained that there was a good opportunity to forge meaningful bilateral relations on the sidelines of APEC and how to pursue these. The following agreements were made:
The President thanked the members of the LEDAC for their efforts to advance legislation necessary to the pro-poor agenda, the most necessary of which are the revenue measures. Her Excellency reminded the Council that Congress is the central player in this effort. Legislative And Administrative Fiscal Reform Measures A. Report on the Status of Tax Measures Secretary Claudio presented to the body an update of the eight (8) administration-sponsored revenue measures of which four (4) are being prioritized. These are the following: Four (4) Priority Revenue Measures
The President proposed to the body to change the name of the bill to Accountability Reform Bill
The President requested that the Lateral Attrition Bill be renamed the Fiscal Accountability Bill in order to avoid confusion on the bill’s subject matter. Likewise, Secretary Claudio discussed the next four (4) priority revenue measures, to wit:
B. Administrative Measures for to Increase Revenues and Generate Savings Secretary Amatong presented the indicative revenue impact of the Administrative Measures for CY 2005. It was estimated that administrative reforms in the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC), Bureau of the Treasury (BOT) and the National Power Corporation (NPC) shall generate a total of PhP 54.9B of which PhP 44.9 shall come from NPC reforms including rate increases. Secretary Amatong also discussed the impact of the administrative measures on the country’s national government deficit). Secretary Amatong explained that executive estimates that the current level will equal to -4.2% of Gross Domestic Product (GDP) compared to the previous ratio of -4.6% of GDP. Moreover, they estimated that level would go down to -3.8% of GDP in 2005. In terms of the consolidated public sector debt (CPSD), the measures are expected to result in a significant reduction of the CPSD from the original 2004 estimate of -6.7% of GDP to -5.6%. Likewise, the government is targeting a CPSD level of -4.2% in2005 C. Congressional Legislative Agendas Senate President Drilon informed the body that the leadership of both Houses of the legislative branch shall harmonize their legislative agendas and present a joint legislative agenda in the next LEDAC meeting. Discussions Fiscal Incentives Rep. Lapus informed the body that there are several bills being considered by his committee regarding the rationalization of fiscal incentives. Senate President Drilon reminded the body that as a matter of public policy, the fiscal incentive reforms would be levied on future investors and not the current investors. Moreover, Rep. Lapus informed the body that the other measures concerned incentives such as duty free importation privileges granted to cooperatives that need to be rationalized. Fiscal Targets to avoid Credit Downgrade On a query from Senator Villar, the President set a target of PhP 80 Billion of reduced public expenditures and increased revenue measures. The Executive pledged to meet the PhP50 Billion target discussed by Secretary Amatong in her report while Her Excellency requested Congress to enact revenue measures worth PhP30 Billion in order to avoid a credit downgrade by the major international credit rating agencies. Telecom Franchise Tax Senator Villar queried the body about which of the tax revenue bills would be the easiest to enact in terms of political acceptability. Senate President Drilon suggested the increase of the franchise tax on telecom companies. Secretary Purisima suggested imposing a flat tax of 10% on the telecom companies and deleting the value added tax (VAT). Rep.Lapus replied that the removal of the VAT imposed on the telecom industry would give negative signals to the government’s program to reduce VAT exemptions. Rep. Locsin suggested that the Department of Finance (DOF) be tasked to submit the appropriate level of increase of the Franchise Tax. Senate President queried the Senator Recto and Rep.Lapus on the status of the telecom bill in their committees. Rep. Lapus informed the Council that his committee had prioritized other bills and had yet to conduct a public hearing. House Speaker De Venecia suggested that both Houses conduct joint hearings on the bill to expedite passage. Senate President Drilon supported the House Speaker. Senate President Drilon also queried the minority leaders of both Houses for their support to expedite passage. Agreements Congressional leaders pledged to the passage of the Sin Taxes and Telecom Franchise Bill by yearend. Both Ways and Means committees would conduct joint public hearings on the Amended Telecom Franchise Bill to facilitate passage in the legislative mill. The Lower House would also work for passing the Revised VAT Exemption and Fiscal Responsibility Bill also by yearend. Download The Full Version Of This Document In Microsoft Word Format |
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