RP to lose P4.75b on first year of Japan pact

The Japan-Philippines Economic Partnership Agreement is expected to cost the national coffers as much as P4.75 billion in the first year of its implementation, according to a study conducted by the Department of Finance.

The study, however, said the increased trade with the country’s second-largest bilateral partner would compensate for the foregone revenues.

Finance Undersecretary Roberto Tan told reporters that the revenue impact of the agreement, signed by President Gloria Macapagal Arroyo and Japan Prime Minister Junichiro Koizumi in September 2006, would result in foregone revenues of between P3.2 billion and P4.75 billion in the first year of its implementation.

The foregone revenues would arise from lower duties collected by the Bureau of Customs from imports from Japan, the Philippines’ second- largest trading partner after the United States, the study said.

It said the Philippines would have to forego duties ranging from P2.86 billion to P4.24 billion as well as value-added tax ranging from P343 million to P509 million.

Tan said the increased volume of trade between Japan and the Philippines due to lower tariffs would help the country post a higher gross domestic product growth.

He said a faster economic expansion would result in more employment for Filipinos and higher tax collections by the Bureau of Internal Revenue.

“There are lots of benefits which will lead to higher tax collections at the end of the day,” he said.

The agreement, which will eliminate tariffs on almost all industrial goods within 10 years from its effectivity in 2007, has yet to be implemented since it still needs ratification from the Senate. –Lawrence Agcaoili, Manila Standard