Election taxes Philippine reform:

Marozzi, Justin . Financial Times ; London (UK) [London (UK)]08 May 1997: 05.

ProQuest document link

FULL TEXT
The Philippine comprehensive tax reform programme, dubbed the CTRP, is in danger of falling victim to election
politics.
Last week, Mr Jose de Venecia, speaker of the House of Representatives and a leading candidate for presidential
elections next year, announced that the lower chamber had approved the final portion of the CTRP, which deals
with personal and corporate income taxation, tax incentives and tax administration.
He highlighted a maximum tax exemption level of 146,000 pesos (£3,420) for a family of six, with a further tax
credit taking that figure in effect to 166,000 pesos - and a ceiling of $60,000 for overseas workers.
"This package of tax exemptions will benefit about 23m to 25m Filipinos, or more than one-third of the entire
Philippine population," he proclaimed.
What he did not say was that the House had not even finished debating the bill and has yet to hand it over to the
Senate. The tax legislation, centrepiece of reforms by the administration of President Fidel Ramos and the last
remaining obstacle to graduating from IMF tutelage, has become a political football.
The figures themselves disappointed some. Ms Nene Guevara, undersecretary of finance, calculates that 87 per
cent of taxpayers would be exempted and 34.9bn pesos in revenue lost annually. This would not help a
government seeking to ensure a dependable stream of revenues from an equitable tax base in the face of
dwindling privatisation proceeds - the aim of the CTRP.
The department of finance argues its proposals for exemptions of up to 96,000 pesos per taxpayer already exclude
those below the poverty threshold. With the higher levels supported by the House, "we may end up with a tax
deform instead of a tax reform," it concludes.
If Congress does not pass the bill by June, says Ms Guevara, the country may have to wait until December as
electioneering reaches fever pitch. Worse still, some observers believe, Mr Roberto de Ocampo, the finance
secretary and another presidential aspirant, may also be tempted to make political capital out of the issue.
"I don't know of any other country in the world which would undertake tax legislation so close to a national
election," says the chief executive of one of the country's largest banks. "It's asking for trouble."
With the IMF programme due to expire on June 23, Congress set to adjourn on June 5 and the Senate yet to begin
reviewing the bill, prospects for its early signing into law now look increasingly unlikely.
The IMF programme, the country's 35th in 23 years, is a three-year $684m (£420m) credit facility, untouched after
an initial drawing. Apart from being a critical measure in its own right - the revamped tax system will raise
domestic savings which are among the lowest in the region and help ward off a return to fiscal deficits - there are
other investment benefits from a timely completion of the programme, says Mr David Nellor, IMF representative in
Manila.
"Passing of the CTRP on time would send a strong signal to international investors and the credit rating agencies
that the Philippine reform programme is on track, after being derailed so many times in the past," Mr Nellor said. "It
is important for emerging economies, particularly the Philippines, to establish a strong track record because the
markets still need to be convinced. Finally, it may also improve the prospects for a credit upgrade."
* The Philippine Securities and Exchange Commission, the market watchdog, yesterday suggested a move to limit
share price fluctuations, following recent volatility on the Manila exchange. The proposals include the suspension

PDF GENERATED BY SEARCH.PROQUEST.COM Page 1 of 3

of trading in shares which rise more than 30 per cent in one day, blue chips falling more than 10 per cent, non-
speculative shares by more than 15 per cent and speculative shares by more than 20 per cent. Shares are now
suspended when they gain or lose 50 per cent in one trading session.
The SEC proposal follows the biggest market fall in 26 months last week which the authority blamed on
"sensational but groundless reports of an impending collapse in the property market". The market fell 3 per cent
yesterday to 2,694.4 points, following a 6.5 per cent rally on Monday and Tuesday.
Justin Marozzi Copyright Financial Times Limited 1997. All Rights Reserved.

DETAILS

Subject: Other Financial, Financial- Other; Other Financial, Fund Managers &Stockbrokers;
Government - central; Markets &market information; Politics; Taxation

Location: Philippines, Asia

Company: Congress - The Philippines department of finance House of Representatives - The

Philippines International Monetary Fund (IMF) Securities and Exchange Commission
- Philippines Senate - The Philippines

Publication title: Financial Times; London (UK)

Pages: 05

Number of pages: 0

Publication year: 1997

Publication date: May 8, 1997

Section: NEWS: ASIA-PACIFIC

Publisher: The Financial Times Limited

Place of publication: London (UK)

Country of publication: United Kingdom

Publication subject: Business And Economics--Banking And Finance, Political Science

ISSN: 03071766

Source type: Newspapers

Language of publication: English

Document type: Stories

ProQuest document ID: 248330912

PDF GENERATED BY SEARCH.PROQUEST.COM Page 2 of 3

 Document URL: https://search.proquest.com/docview/248330912?accountid=47253

Copyright: Copyright F.T. Business Enterprises Limited (FTBE) May 8, 1997

Last updated: 2011-11-01

Database: ProQuest Central

Copyright  2017 ProQuest LLC. All rights reserved.

Terms and Conditions Contact ProQuest

PDF GENERATED BY SEARCH.PROQUEST.COM Page 3 of 3