Philippine Vat law suspended; new setback for Arroyo
The Philippine Supreme Court suspended a value-added tax law at the center of embattled President Gloria Arroyo’s plan to curb government debt that’s tripled in seven years and which prompted Fitch Ratings to raise its outlook on the nation’s junk debt rating in May.
The law, which extends the tax to fuel and other previously exempt products, is suspended while judges decide on at least four petitions to strike it down, the court said in a resolution received through fax and confirmed by spokeswoman Gleo Guerra.
The law was passed in May and took effect today. The petitioners asked for it to be struck down because of what they say is an unconstitutional provision that gives Arroyo the authority to raise the rate to 12 percent in January next year from the current 10 percent. The suspension is yet another setback for Arroyo who is facing calls to resign over allegations she rigged last year’s presidential vote count.
‘It’s a negative’’ for Philippine bonds and the peso, said Davide Fernandez, a vice president at JPMorgan Chase & Co. in Singapore. ‘‘This is a surprise.’’ The government had said expanded coverage and the higher rate would allow it to end budget deficits by 2008, two years ahead of schedule.
More: financialexpress.com