League of Cities of the Philippines president and Iloilo City Mayor Jerry Treñas yesterday said the Expanded Value Added Tax is a bitter pill to swallow and there is a need for the government to monitor prices of commodities.

The President approved the additional 2 percent-point increase in the VAT rate Wednesday, three months after imposing the tax on previously exempt products and services such as oil, power, medical and legal services, and domestic air and sea transport.

"What is important is there are safeguards in place and the government should conduct information dissemination because some small businessmen think it is an additional 12 percent increase in the prices of commodities," Treñas said.

The VAT Reform Law is expected to yield P75 billion in incremental revenues this year, and the government intends to use 30 percent of the amount, or P22.5 billion, for pump priming, according to the Department of Energy.

The remaining 70 percent will be used to reduce the budget deficit.

Meanwhile, Treñas said he and Bacolod Mayor Evelio Leonardia had initial talks on the eventual twinning of the cities of Iloilo and Bacolod. He said that if the two cities are pushing for joint concerns, like economic or required infrastructure, it will be easier to get assistance from the national government. "We have seen that in Iloilo, and we have one with Guimaras, " he said.

Treñas said the twinning of Iloilo and Bacolod is important for the development of the region.*CGS

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