Finance chief to recommend VAT increase in February
Finance chief to recommend VAT increase in February
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FINANCE Secretary Margarito Teves believes the government will enforce a two-percentage point increase in the value-added tax (VAT) starting February 1 since a condition triggering the tax hike is likely to have been met.
“The Department of Finance will recommend to the President to increase the VAT rate as required by law,” Teves said in a press briefing.
Under the law, President Gloria Arroyo can raise the VAT rate to 12 percent from the existing 10 percent when either the government deficit exceeds 1.5 percent of GDP or when VAT collections, as a percentage of GDP, are more than 2.8 percent.
Teves said preliminary estimates showed that a budget deficit of 160 billion pesos last year is equivalent to around three percent of the country’s GDP estimated at about 5.3 trillion pesos.
Earlier, National Treasurer Omar Cruz said the government’s budget deficit in 2005 is likely below his initial estimate of 160 billion pesos and much lower than the official ceiling of 180 billion.
More: money.inq7.net