INTRODUCTION
Yesterday, we signed Joint House Resolution No. 28 which aimed to enhance the nation’s security through a modernized armed forces.

However, for the government to deliver better services to our people, we need a more equitable, broader-based and less graft-prone taxation system that would sustain the country’s requirements for service delivery and community development.

Reflecting on the spirit of the Christmas season, this is a continuing exchange of gifts between our people and the government: the taxes they pay allow us to ably respond to their present and future needs and to undertake effectively the programs that will promote the nation’s well-being.
THE NEED TO AMEND THE EVAT LAW
No matter how great our need may be to bring in sufficient revenues, however, on the basis of the generally-accepted rule that whoever consumes more must be taxed more, our tax system must not unduly disadvantage one sector over another, most particularly in those instances where ordinary people assumed a heavier burden that is not commensurate to their economic condition.

It is for this reason that we are gathered here today to witness the ceremonial signing of Republic Act No. 8241, amending Republic Act No. 7716, otherwise known as “The Expanded Value Added Tax (EVAT) Law”.

After a long and intensive process of consultation with the various sectors of our economy, we have taken one more important step towards a more efficient and equitable tax effort for our country.

Putting our taxation system in order is imperative if we are to ensure a solid government fiscal position over the long run. Without a democratic and more rational tax policy, our country cannot sustain the gains that it has reaped in recent years. We have to continually provide and upgrade urgently needed infrastructure and services to keep the economy growing and to sustain our other developmental needs.

It is in this light that we put great significance in the efforts that went into making the value-added tax a better system. With these on-going reforms in our tax package, government is assured of a long-term, predictable and sustainable source of revenue which leads to long-term economic growth, balanced with social equity. These contribute to the eventual improvement of the quality of life of our people.
AMENDMENTS TO THE EVAT LAW
With the approval of this vital piece of legislation, we uphold the basic qualities of VAT — the very reasons why we shifted to this system eight years ago.

Since its enactment and implementation in 1988, the VAT system has provided a buoyant revenue base. In 1995, it raised p28.8 billion or 9.3% of total revenue. This year, the VAT is expected to raise p72 billion which can be used to finance even more infrastructure needs and social services.

The value-added tax works efficiently when it is broad-based, which was why we had to expand the scope of the original VAT. It was necessary, however, that we ensure genuine equity in the system.

The new law does exactly that through the following additional items, among others, that will be exempt from the EVAT:

1. Non-food agricultural products, marine and forest products, cotton and cotton seeds, copra, fertilizer, seeds, fingerlings, fish, prawn, livestock and poultry;

2. Coal and natural gas, and petroleum products and raw materials for their manufacture, except lubricating oil, processed gas, grease, wax and petrolatum;

3. Medical, dental, hospital and veterinary services, except those rendered by professionals;

4. Educational services rendered by private and government educational institutions;

5. Sales by artists themselves of their works of art, literary works, musical compositions and similar creations, or services rendered for the production of such works;

6. Sales by agricultural and electrical cooperatives;

7. Sale of houses and lots and other residential dwellings valued at p1 million and below;

8. Lease of residential units with monthly rental of not more than p8,000; and,

9. Sale, importation, printing or publication of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to paid advertisements.
CLOSING
Rather than viewing these amendments as constricting the base of the VAT, these should be seen as improvements aimed at making the VAT system a fairer system for everyone. Indeed, the task was difficult but the job was very well done.

I commend and thank the honorable members of Congress, led by Senate President Ernesto Maceda and Speaker Jose de Venecia, and Ways and Means Committee Chairmen Senator Juan Ponce Enrile and Congressman Exequiel Javier, for making possible the enactment of this major law. Equally to be appreciated are those who, in their respective ways, either with expressions of support or with constructive criticisms, have helped improve the vat system and made it a true instrument of equitable growth.

Today’s ceremonial signing, coming as it does only a few days before Christmas, is a most welcome gift indeed to the large number of our social classes who will be benefitted by RA 8241.

Maligayang Pasko, masaganang Bagong Taon at mabuhay kayong lahat! Maraming salamat.