Preamble
WHEREAS, there is a need to restructure the sales tax system to make it more progressive and responsive to the requirements of a developing economy; WHEREAS, certain luxury and semi-luxury articles should be reclassified based on their inherent essentialities consistently with present economic levels and conditions; WHEREAS, to minimize the adverse effects of worldwide inflation, the sales tax rate of basic commodities should be reduced from 7% to 5%; WHEREAS, local governments are in need of additional revenue to augment the funds needed in their development projects; WHEREAS, in the interest of equity and in order to eliminate the double taxation feature of the present sales tax system as regards raw materials used in the manufacture of articles, there is need to adopt the tax credit method in computing the sales tax; WHEREAS, in order to make the administration of the customs duty and advance sales tax or compensating tax simple, it is desirable to adopt a common base of valuation of imported articles for such levies; NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree: