Observer - Asia

Blame game

Philippine lawmakers seem to agree on raising value-added tax to improve revenues and avert a debt crisis, but not on who should take the blame for it. The House of Representatives passed a VAT bill increasing the rate by two points to 12 per cent while the more cautious Senate version keeps the tax at 10 per cent but removes the exemption enjoyed by a number of industries.

After days of backroom negotiations, leaders of the two chambers are said to have agreed on a compromise formula that is likely to win the support of their colleagues.

Instead of legislating an outright increase in the VAT, lawmakers will instead come out with a law that will keep the tax at 10 per cent but give the country's president, Gloria Macapagal Arroyo, the prerogative to raise it to 12 per cent under certain conditions.

The president seems happy to take responsibility.

A sign of her political courage, say supporters. Maybe, but Observer's psephologist points out that unlike some of the lawmakers, who are facing re-election in 2007, the president's term ends in 2010 and she's not eligible to stand for office again.

Below the belt

The Philippines may have a female president, but it retains a macho political culture.

Exasperated by newspaper allegations of alleged wrongdoing her husband, Miguel Arroyo, is challenging critics to a mediaeval-style trial by ordeal.

Arroyo was particularly irked by suggestions that he abused his position as presidential spouse by allegedly staying in a $20,000-a-night room at the MGM Grand Hotel in Las Vegas to watch a boxing match.

Not content with a simple denial, the First Gentleman, as Arroyo is known, said he was willing to be castrated if critics could prove he stayed at the expensive room.

But he also challenged them to do the same thing if they fail to back up their allegations. "If they can find a room in Las Vegas that's $20,000 [per night], I'll cut off my balls. But if they cannot, they should cut theirs," a Manila-based newspaper quoted him as saying in a speech on Wednesday evening while inducting officers of a press club in Negros province, south of Manila. Macapagal can only hope her husband knows what he's doing.

Observer's brief search found an MGM room at $10,000 a night this Sunday. Any advance?

observer@ft.com

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