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P100B to fund ‘big ticket’ projects

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By Joel Guinto
INQUIRER.net
First Posted 15:39:00 10/17/2008

MANILA, Philippines — President Gloria Macapagal-Arroyo has ordered the pooling of 80 percent of value added tax (VAT) collections — around P100 billion — to finance “big ticket” projects and court public support for the unpopular revenue measure.

Arroyo, through Administrative Order 240, issued October 3 but released to Malacañang reporters only on Friday, ordered the creation of the Revenues Allocated for Public Services (REAPS), a “basket” for “all the fruits of value added tax.”

“The most popular, high-impact, big ticket projects shall be selected and put together in one basket. All social services, all new activities both retail, [like the] LRT [Light Rail Transit] expansion shall be placed there [REAPS],” the order read.

“Whereas, if the administration is called to account for the reformed VAT spending, then, it should be able to point to the contents of the Revenue Allocated for Public Services [REAPS] as the reformed VAT rebates,” it said.

By telling the public where the government spends VAT collections, calls to scrap the measure can be addressed, the order read.

“REAPS can create pro-reformed VAT constituencies created out of beneficiaries,” the order said, adding that a fourth wave of government salary increases could also be sourced from the fund.

While REAPS “need not appear” in official budget documents, according to the order, it can be “highlighted” as an “off-budget document” in government presentations.

The full title of AO 240 is “Ordering Budget Maximizers Without Expanding Expenditure Parameters.”

In a roundtable discussion following a dinner she hosted for delegates to the Association of Southeast Asian Nations 100 Leaders Forum at the Palace on Wednesday evening, Arroyo said raising taxes was the most difficult decision she has made as president, since it cost her popularity.

But she stood pat on the fiscal reform measures, saying these had put the economy in “good shape” to weather the global economic crisis.

“The Philippines appears in relatively good shape, thanks to our fiscal reforms that manifested in our seven percent plus GDP [gross domestic product] growth last year,” Arroyo said.

“Were it not for the painful reforms for the past seven years, the impact of the global crisis would have been much worse,” she said in another speech in Calapan City on Thursday.

View article as posted on INQUIRER.net

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Written by joelguinto

FriUTC2008-10-17T09:49:57+00:00UTC10bUTCFri, 17 Oct 2008 09:49:57 +0000 22, 2006 at 12:45 am10

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