Mr. Senate President and the distinguished members of the Senate, Mr. Speaker and the distinguished members of the House; my co-workers in government; ladies and gentlemen.

We have just signed into law two significant measures that will improve the efficiency of our tax collection and effectively raise the revenues that are needed for our program of government.

Republic Act No. 7649 requires the government or any of its political subdivisions, instrumentalities or agencies, including government-owned or controlled corporations to deduct and withhold the value-added tax due at the rate of three per cent on gross payment for the purchase of goods, and six per cent on gross receipts for services rendered by contractors.

The VAT withheld shall be remitted within ten days following the end of the month in which the withholding was made.

The measure will not only improve the cash flow of the government by being able to collect at source six per cent and three per cent, respectively, of the VAT taxes imposed on contracts and purchases, but it would also add to revenues because experience has shown that most contractors or suppliers do not have the necessary resources left to pay these taxes to the government at the end of their projects.

It is estimated that capital outlays by the national government from 1993 up to 1998 or the period of the Medium-Term Philippine Development Plan would total p900 billion. For GOCCs, the capital outlay for the period would total some P300 billion and for local government units, P200 billion. Hence, the grand total for capital outlay is estimated at P1,400 billion. At six per cent withholding tax rate, the government can anticipate a tax collection of about p84 billion over the six-year period.

Total purchases of goods are estimated at some P3 billion a year or P18 billion for the planned period. Therefore, the three percent withholding rate is expected to yield the government another P540 million in revenue.

On the other hand, Republic Act No. 7650 repeals Section 1404 and amends Section 1401 and 1403 of the Tariff and Customs Code of the Philippines, as amended, relative to the physical examination of imported articles.

This act abolishes the mandatory requirement of ten per cent examination of imported goods.

Given the volume of imported goods that arrives every day and the limited manpower complement of the Bureau of Customs, the previous requirement of 10 per cent examination, now repealed, created serious bottlenecks and delays in the inspection and release of importations which, in turn, resulted in congestion, increased warehousing costs and heightened incidence of pilferage in the customs-holding area.

The repeal of said provision effectively addresses the problem of the undue delay in the clearance and release of imported goods, but this will not mean that all shipments will no longer be examined. This act provides six instances where mandatory examination will still be enforced, outside of which the Bureau of Customs is given the flexibility to determine which shipments can be released without physical examination.

With these two measures, we can anticipate the increase of government revenues for the benefit of our people with fewer possibilities for corruption and a diminished burden on the bureaucracy.

Once again, legislative-executive teamwork has resulted in improving government’s position towards achieving our vision of “Philippines 2000!!!” these are two new laws which are for the people’s welfare and our national interests.

Again, fine work by the Herrera tandem together with Javier and Macapagal-Arroyo tandem with Payumo and Roilo Golez, all under the leadership of the Angara-de Venecia tandem.

Mabuhay kayong lahat. Maraming salamat po. Mabuhay ang Pilipinas!