Economy back on track next year, govt predicts
Manila Standard
THE Philippines expects economic growth to accelerate in 2009 as inflation and interest rates ease, an official said yesterday.
The expansion in the gross domestic product may accelerate to a range of 6.1 percent to 7 percent in 2009, Budget Undersecretary Laura Pascua told reporters after a meeting of economic managers.
That range would compare with this year’s revised target range of 5.7 percent to 6.6 percent, Pascua said.
She made the statement even as another official said the government was deciding if it could lower the tax on oil and petroleum products to help soften prices.
A possible lowering of that tax was in response to calls to suspend it, said Augusto Santos, director general of the National Economic and Development Authority.
“It will not really be suspending but more of lowering the VAT, but we have to clarify that this would require legislation,” he said.
“We can lower the VAT to a level that is revenue-neutral. Given the increase in [oil tax collections], we have windfall revenue, so we can lower the VAT rate to the extent that the government will no longer generate windfall.”
That windfall reached P4 billion in the first quarter, and the government spent P2 billion of the money to pay for the power bills in June of consumers using 100 kilowatt hours or less. It also earmarked P1 billion to provide scholarships to deserving students, and another P1 billion to modify diesel engines to run on cooking gas.
Finance Secretary Margarito Teves said the government would lose P73.1 billion in oil revenues if the oil tax was lifted.
“Lifting the VAT on oil will largely benefit the rich because they are the biggest consumers of oil, while most of the consumption of the poor families is VAT-exempt, such as food products,” Teves said.
Bloomberg with Joyce Pangco Pañares
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