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Manila: Philippine President Gloria Macapagal Arroyo on Monday rejected appeals to scrap an unpopular value-added tax (VAT) because of surging inflation.
During her state of the nation address, Arroyo said her government would maintain the 12 per cent VAT on oil but that proceeds would go to pro-poor projects.
"Take away VAT and you and I abdicate our responsibility as leaders and pull the rug from our present and future progress," Arroyo said.
"We have come too far and made too many sacrifices to turn back now on fiscal reforms," she added.
Outside parliament, hundreds of protesters clashed with police armed with batons. The protesters were demanding for government action over rising food prices.
Arroyo said the price of food and fuel will likely remain high. “Nothing will be easy, the government cannot solve these problems overnight, but we can work to ease the near-term pain while investing in long-term solutions," Arroyo said.
Anti-Arroyo protesters blame her government for the soaring prices of food and fuel in the country.
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