Gov’t urged to prioritize improved tax administration over new taxes

By John Victor D. Ordoñez, Reporter

THE GOVERNMENT must push for stricter and more efficient tax administration and collection over imposing new taxes to fund the Marcos administration’s flagship projects, a strategy economists favor in order to avoid fanning inflation.

“A more efficient tax administration will yield higher revenues to fund the government’s flagship projects,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, told BusinessWorld over the weekend.

He echoed the sentiment of new Senate President Francis “Chiz” G. Escudero, who stated last week that he favored improving tax collection and prevent leakages in government spending before considering new taxes.

“Senate President Escudero’s commitment to supporting improved tax collection instead of imposing new taxes provides a welcome respite to a nation confronting continuing economic uncertainties due to inflation, joblessness and a weaker peso,” Mr. Ridon said in a Facebook Messenger chat.

“This has been the policy priority of the government in recent months to increase recurring sources of revenues through intensified tax collection based on existing tax laws, instead of new taxes or higher taxes (as a final option) that may increase prices and overall inflation,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Bureau of Internal Revenue (BIR) aims to collect about P2.6 trillion in taxes this year. It collected about P2.53 trillion in taxes last year, missing its target of P2.64 trillion.

The agency also eyes collecting about P599.2 billion in value-added tax this year, 11% higher than the P538.1-billion goal for 2023.

Upon his appointment as Finance chief last March, Secretary Ralph G. Recto, also a former senator and congressman, shunned new taxes under the administration of President Ferdinand R. Marcos, Jr., saying higher tax rates could worsen smuggling and illegal trades.

However, Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said opposing new taxes would limit the government’s responsiveness to new social and economic issues.

“Selective, judicious new taxes are viewed as a necessary governing tool for institutional adaptability to changing social and economic conditions,” he said in a Facebook Messenger chat.

“Taxes are responses to externalities that need to be addressed to achieve social goals, and lead to social benefits far beyond simply improving tax revenue generation.”