ECONOMIC REFORMS

At the same time, the administration implemented several economic reforms to open the Philippine economy and encourage private sector investments. These included tax reforms, deregulation of the oil industry, liberalization of certain sectors, and privatization of several government entities.

In 1994, Congress passed Republic Act 7716 (Expanded ValueAdded Tax Law) which imposed a 10% tax on the gross sales of goods and services. Among the sectors included in the coverage of the E-VAT were hotels and motels; restaurants and caterers; securities dealers and lending investors; operators of taxi cabs, utility cars, tourist buses, road freight; operators of common carriers involving cargo transport such as domestic ocean-going vessels, inter-island shipping vessels, and aircraft; and franchise holders of telephones, telegraphs, radio and broadcasting.

It also repealed the VAT exemptions enjoyed by certain sectors such as the Export Processing Zone Authority, Coal Mining Corporation, oil explorers, Board of Investment- registered firms and non-electric cooperatives.

A major piece of the administration’s reform was the passage of the Comprehensive Tax Reform Program (CTRP) which restructured some components of the country’s tax system.

This included: Republic Act 8240 in 1996 which shifted the taxation of “sin” products from ad valorem to specific tax; Republic Act 8424 in 1997 which instituted changes in individual and corporate income tax and reforms to enhance the functions of the Bureau of Internal Revenue; and Republic Act 8184 in 1996 which restructured the excise tax on petroleum products in support of the Oil Deregulation Law. The collection of new revenues expected from the CTRP was part of the Philippines’ exit strategy from the tutelage of the International Monetary Fund, providing the country with higher chances of receiving better credit ratings and generating more funds to finance various projects.

Meanwhile, the government’s Oil Price Stabilization Fund continued to decrease as it tried to defer several price increases. This was