Press Secretary Ignacio R. Bunye said today the proposed bill that seeks to hike the Value Added Tax (VAT) rate will not affect prime commodities and will hardly be noticed by ordinary Filipinos.

In a radio interview this morning, Bunye said the proposed amended VAT law provides for many safety nets and exempts from its coverage basic goods, particularly agricultural products like rice, pork, fish, vegetables, and other items, which constitute about 70 percent of what ordinary Filipinos buy in the market.

"Even the VAT on instant noodles which seems to have become a favorite among the masses, will perhaps increase their prices by one or two centavos only and will hardly be felt," Bunye said.

"The one- or two-centavo VAT tax equivalent, however, polled together could mean substantial help for the national coffers," he explained.

Bunye pointed out that as a consumption tax, VAT is largely shouldered by high-end consumers or spenders.

The buoyancy of the economy combined with an equitable revenue program and a strong fight against corruption are setting the stage for a decisive turnaround that will bring in more investments and jobs for our people.

From the start we have assiduously worked with Congress to build in the safety nets to cushion the impact of new taxes on the poor.

We are willing to listen to all well meaning officials in this direction – whether these come from administration allies, the opposition or various groups that have the interest of the people in mind.

There should be no divisions between pro-business or populist advocates.

President Gloria Macapagal-Arroyo signed into law today Republic Act (RA) No. 9335, or the Attrition Act of 2005 that will improve the national tax collection performance through the creation of a rewards and incentives system.

In a signing ceremony hosted by Presidential Political Adviser Gabriel Claudio at the Rizal Hall, the President expressed her gratitude to both houses of Congress for their contribution in finally passing the consolidated (House Bill 2996 and Senate Bill 1871) measure on January 19, 2005.

"I thank Congress and the Senate for passing the Attrition Law, which I like to call the Accountability Reform Law. I also congratulate both the legislative and executive branches who did a complete, tough work that is so important to the work of economic legislation," she said.

She also thanked the local and international economic community for acknowledging the Legislative-Executive partnership in the economic reforms she’s pushing that keep the Philippine Stock Market bullish while other Asian stock markets are on a downtrend direction.

"From the start, we have assiduously worked with Congress to build in the safety nets to cushion the effect and the impact of the new tax measures on the poor should there be any," she added.

The President also expressed willingness to accept well-meaning proposals not only from administration allies but also from the opposition and various groups that have the interest of the people at heart.

"There should be no divisions between pro-business or populist advocates. We must all be for one, united, stable and prosperous nation," she said.

With the enactment of the Accountability Reform Law, the President called on the House of Representatives to pass another important revenue -- the Value Added Tax (VAT) bill.

RA 9335 would provide a system of rewards and sanctions through the creation of a Rewards and Incentives Fund, and a Revenue Performance Evaluation Board for the purpose of encouraging officials and employees of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) to exceed their revenue targets for 2005.

Witnessing the signing of the Attrition Law were Executive Secretary Eduardo Ermita, Senate President Franklin Drilon, House Speaker Jose de Venecia Jr., the principal sponsors of the measure, Senate Ways and Means Committee chair Sen. Ralph Recto, Sen. Juan Ponce-Enrile, House Ways and Means Committee chair Representative Jesli Lapus, Rep. Raul del Mar and House Majority Leader Prospero Nograles.

Others members of Congress present were Sen. Manuel Lapid, Reps. Eduardo Gullas, Luis Villafuerte, Exequiel Javier, Edcel Lagman, Mathias Defensor Jr., Benasing Macarambon, Jr., Junie Cua, Teodoro Locsin Jr., Herminio Teves, Antonino Roman, Eric Singson, Alipio Cirilo Badelles, Rolando Andaya Jr., Imee Marcos, Agapito Aquino, Jose Carlos Lacson, Francis Nepomuceno, Eufrenico Codilla, Consuelo Dy, Ernesto Pablo, Proceso Alcala, Mauricio Domogan, Juan Miguel Arroyo, Anthony Miranda and Monico Puentevella.

Government officials present during the ceremony included Land Reform Secretary Rene Villa, Justice Secretary Raul Gonzalez, Press Secretary Ignacio R. Bunye, Chief Presidential Legal Counsel Merceditas Gutierrez, Agriculture Secretary Arthur Yap, Customs Commissioner George Jereos and BIR Commissioner Guillermo Parayno Jr.

President Gloria Macapagal-Arroyo said today the improving economy, coupled with an equitable tax program and a sustained campaign against graft and corruption, is opening the way for a turnaround that will attract investments and create jobs for Filipinos.

In a brief speech during the signing into law of Republic Act (RA) 9335 at the Rizal Hall in Malacaņang this morning, the President said the "buoyancy in the economy, combined with the equitable revenue program and a strong fight against corruption are setting the stage for a decisive turnaround that will bring in investments and jobs for our people."

She also paid tribute to the close executive-legislative partnership in the urgent effort to put the country’s fiscal house in order.

Thanking both houses of Congress for the enactment of the Attrition Bill, the President congratulated "those in the legislative and executive branches who did the complete, fast work that is so important to the work of economic legislation."

She also stressed that from the very beginning, she had worked closely with Congress to "build the safety nets to cushion the effect and impact of new tax measures on the poor should there by any."

The Chief Executive express appreciation to economic community, both local and foreign, for "acknowledging our legislative-executive partnership for reform by putting their money where their money is so that the peso has been strengthened and the stock market has been rallying."

She pointed out that while Asian stocks have been losing ground, "Philippine stocks are showing strength."

Press Secretary Ignacio R. Bunye said today the strong rally of the peso against the US dollar and the bullish surge of the stock market on Monday reflect the strengthening investors’ confidence in the Philippine economy.

In a radio interview this morning, the Secretary said the strengthening of the pesos is particularly significant because the Philippines is a net importer, which means "we will need less pesos to pay for our imports."

It is likewise significant, he added, because the "Philippines has foreign obligations to meet and the stronger the country’s currency is, the less pesos will be needed to pay our foreign debts."

Secretary Bunye explained that the stock market serves as a sensitive barometer of investors’ confidence in the national economy, and the peso often behaves in tandem with the market.

Fund managers, he said, continuously analyze all factors affecting the economy and their assessment is normally reflected in the sentiment that animates trends in the stock market.

The more bullish the market sentiment goes, he said, indicates that "there are more participants (in it) and there more who believe that the long-term prospects of the Philippines are bright."

Such indication, the Secretary said, is a good signal because "it will in turn invite more investments" in the country.

President Gloria Macapagal-Arroyo today regretfully accepted a request made since last year by Energy Secretary Vincent Perez that he be allowed to relinquish his Cabinet post and return to the private sector.

The President thanked Secretary Perez for the valuable assistance he has given her and for his personal financial sacrifice, during his four years of dedicated service to the government.

As one of the longest serving members of her economic team, the President cited in particular Secretary Perez’s crucial role in implementing difficult power sector reforms, reorganizing the public energy sector, jumpstarting the much-awaited privatization of Napocor, ensuring no more Luzon-wide blackouts since May 2002, and addressing the power requirements of Visayas and Mindanao.

The President underscored the valuable contributions made by Secretary Perez in the country’s quest for energy independence through greater reliance on clean, indigenous and sustainable energy sources. She noted that since 2001, the country has increased its use of indigenous natural gas and geothermal power, and has attracted renewed interest in petroleum exploration.

She cited his key role in accelerating rural electrification to 6,600 barangays, more than any of the last three administrations.

Furthermore, she thanked the Secretary for quarterbacking her energy diplomacy initiatives by strengthening strategic energy alliances with Australia, China, India, Indonesia, Iran, Korea, Japan, Malaysia, OPEC, Russia, Saudi Arabia, Thailand, United Kingdom and the United States.

The President conveyed to Secretary Perez her strong wish that he continue to help attract more investments into the Philippines. The President believes that Secretary Perez’s experience and credentials as an international investment banker, his diplomatic contacts, and as former head of the BOI will prove invaluable in this task.

The Philippines and the United States continue to uphold a strategic partnership for peace, freedom and global security based on a common fight against poverty.

We fight terror and we wage peace for the cause of the people who want to walk the streets and till the fields without fear, engaging in productive enterprise to lead a dignified life.

The peaceful resolution of the conflict in Mindanao is a task of vigilance as well as development, a mission of defeating terror and defeating poverty.

Press Secretary Ignacio R. Bunye said today the principle espoused by Peruvian economist Hernando de Soto for the conversion of "dead assets" like idle lands, to liquid capital, could significantly help energize and propel the Philippine economy to unprecedented progress.

In a radio interview this morning, Bunye said de Soto’s economic paradigm involving the use of Filipino landholdings as collateral for loans they can invest in profitable small enterprises can have positive and widespread benefits for the national economy.

President Gloria Macapagal-Arroyo earlier said de Soto’s economic paradigm suits the Philippine situation.

Based on conservative estimates, Bunye said, 60 percent of the Philippines’ national assets are deemed "dead assets."

These unproductive assets, which include untilled lands, can be used as collaterals for bank loans, or to buy stock market shares, and build vital infrastructures that will help create a business climate attractive to local and foreign investors, he added.

Bunye said Filipinos should be motivated to convert their dead assets to liquid capital, not for consumption purposes but productive ventures that will help multiply the national wealth and further energize the economy.

The Press Secretary noted that many Filipinos get contented and do nothing else more to their house the moment they own one.

It is important, he said, that they don’t stop there because they can use the house as collateral to secure loans which they can deploy in productive capital placements.