Home Editors' Picks New taxes needed, Balisacan says
New taxes needed, Balisacan says
NEW TAXES may have to be introduced to fund the incoming Marcos administration’s priority projects, but the timing would have to be carefully considered, Socioeconomic Planning Secretary-designate Arsenio M. Balisacan said.
“If you want more public services, if you want to invest a lot into our health and education, and social sector, and to our farmers, you must have sources of money for that. Obviously, you can only go so far with an improved tax administration,” he said in a June 16 roundtable with BusinessWorld editors.
Asked if new taxes would be introduced in the next six years, Mr. Balisacan replied: “I think we should. Part of the fiscal consolidation is to eventually also come up with new sources of tax.”
Incoming Finance Secretary Benjamin E. Diokno has said that he wants to avoid new taxes for now, preferring to focus on improving tax administration via digital processes.
The main issue, Mr. Balisacan said, would be timing the imposition of new taxes, especially with the country still recovering from a pandemic-induced recession.
“You don’t want to raise, I suppose, taxes when economic conditions are difficult,” the incoming National Economic and Development Authority (NEDA) director-general said.
Economic managers are aiming for a 7-8% gross domestic product growth this year, but high inflation threatens to slow the country’s recovery.
The Bangko Sentral ng Pilipinas last week raised its average inflation forecast for this year to 5% from 4.6% previously, well above the 2%-4% target band.
The Department of Finance (DoF) last month unveiled a fiscal consolidation plan which aims to raise an average of P284 billion in fresh revenues every year for the next 10 years to repay the P3.2-trillion additional debt incurred during the pandemic.
The plan involves new tax measures such as value-added tax (VAT) on digital service providers; excise tax on single-use plastics, motorcycles and luxury goods; and tax on gaming and cryptocurrency.
Mr. Balisacan noted that some sectors are still undertaxed.
“I suspect that mining is one [where] there are scopes for improving the royalty that can be charged to ensure that these mining resources are properly managed and sustained,” he said.
As part of the first package of the fiscal consolidation plan, the DoF also proposed establishing a single and rationalized fiscal regime applicable to all mining agreements. The DoF estimates this will generate P11.4 billion on average per year.
Mr. Balisacan said the government should consider pollution tax and more “sin” taxes.
“For example, I don’t understand why luxury vehicles are taxed so low, even vehicles are taxed so low, compared to our neighbors. And I think that while we’re trying to address transport issues, public transport issues, that should be part of the solution rather than just building more skyways,” he said.
The Duterte administration has managed to pass the initial packages of its comprehensive tax reform program, which involved lowering personal income tax, tax amnesty for delinquent taxpayers and higher sin taxes on cigarettes, heated tobacco products and alcoholic beverages.
Also approved was the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which cut corporate income tax.
However, reforms in real property valuation and passive income taxation failed to hurdle Congress.
“Congress didn’t have the appetite for it, for the other components of the reform. Now it’s the burden of this new administration to complete these other components. My colleague (Mr. Diokno) said that we need to study our options…address all these fiscal issues to ensure that the growth will be sustainable,” Mr. Balisacan said.
Catch BusinessWorld Roundtable: The View from the Starting Line with Mr. Balisacan on BusinessWorld’s Facebook page (https://www.facebook.com/BWorldPH) at 11 a.m. today (June 27). — Diego Gabriel C. Robles