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Economic Matters Stir Philippines' Political Pot


Although an opposition drive to impeach Philippine President Gloria Macapagal Arroyo looks set to fail, analysts say festering economic problems could spill over into the political arena and put new pressures on her government.

The Philippines Supreme Court has upheld the Arroyo government's plan to expand the value added tax to oil and electricity as early as next month, and also to increase the tax from 10 to 12 percent next year. The move is part of the government's plan to try to end the country's chronic budget deficit.

Finance Secretary Margarito Teves says the government will be able to collect more than $100 million extra this year, if the new tax law is implemented by October 1 - money the suffering economy badly needs.

But analysts note that the tax will add to the cost of living for consumers already suffering from skyrocketing oil prices. Taxes are never popular, but this one comes during an opposition drive to impeach President Gloria Arroyo, and could increase the political pressures she currently faces.

Antonio Gatmaitan of the Political Economy Applied Research Foundation predicts that the tax will hurt Mrs. Arroyo.

"It is an important issue," said Antonio Gatmaitan. "It is a vital component. It is really the economic issues that will drive the opposition in the streets. The new taxes, the increasing oil prices, are going to be devastating for this government."

A similar view is held by Roman Casiple of the Institute for Political and Electoral Reforms.

"We may see a problem of unrest on the economic side," he said. "And the administration doesn't want to mix the political crisis with that one."

This is not only a view held by analysts. Former President Fidel Ramos, an important political force, threw his voice into the debate this week. He warned that rising fuel prices, the decreasing value of the peso and other factors are contributing to political unrest.

Meanwhile, the opposition has not given up on impeachment. It is hoping to secure 79 votes, one third of the House of Representatives, to get an impeachment motion introduced directly into the Senate next week.

A House committee managed to strike down all of the opposition's impeachment complaints earlier this week, however, and most analysts say the backing for a direct House vote is not there.

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