The House of Representatives has given a third and final reading to legislation raising the rate of the country’s value-added tax from 10% to 12% as President Gloria Macapagal Arroyo forges ahead with her fiscal reform programme.
The measure was passed in a 126-11 vote with no abstentions and could raise a potential PHP35 billion (US$634 million) in new revenues for a government that is desperately attempting to rebuild its finances in order to avert a credit rating downgrade.
However, the proposal has not been without its opponents, and around 30 opposition congressmen walked out during the Lower House deliberations on the bill, claiming the tax hike will unfairly burden the poor.
President Arroyo has already signed into law several measures as part of her fiscal reform plans, including a reward-and-penalty system to improve tax collection, a tax amnesty scheme, and increases in ‘sin’ taxes on tobacco and liquor products.
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