No new taxes, Palace assures
Paolo Romero
Philippine Star
Malacañang gave assurances yesterday that no new taxes would be imposed despite fears of reduced government revenues brought about by the global economic slowdown.
President Arroyo’s economic managers in a press conference at the Palace said the Executive branch would instead push for the immediate passage of the rationalization of fiscal incentives and “sin taxes” bills pending in Congress.
“Our team captain, President Arroyo, has said categorically that there are no new taxes until the end of her term,” Press Secretary Jesus Dureza said in the briefing.
Socioeconomic Planning Secretary Ralph Recto, however, said nothing would prevent lawmakers from approving new taxes if they want to following calls for new revenue measures from some lawmakers, including a tax on text messaging.
Finance Secretary Margarito Teves said the two measures are urgent as they would help soften the impact of the looming recession in the United States. He said the two bills are not new taxes but “revenue enhancement measures” that are expected to generate about P35 billion in new income for the government.
“We need more revenues to handle difficult times and, therefore, we like to pursue as a team two important measures, rationalization of fiscal incentives and rationalization of sin taxes,” Teves said.
He said while the latest reduction in world oil prices was most welcome, it would also mean lesser value-added tax (VAT) revenues. The government had expected VAT revenues from oil to reach a little more than P18 billion this year had the price of crude per barrel in the world market stayed at an average of $115. Teves said the average price is now around $102 per barrel.
He said the rationalization of the existing taxes on liquor and cigarettes, depending on the final version that would be approved, could generate anywhere between P12 billion to P25 billion annually and the rationalization of fiscal incentives could raise P10 billion a year.
Teves said the economic team has made its pitch with members of the House of Representatives on the two measures and the response “is generally positive we hope the same response would be elicited from the Senate.”
Recto said the rationalization of fiscal incentives is also to give justice to ordinary taxpayers who see their paychecks already reduced by automatically deducted income taxes.
“Because there are industries that are making money but are not paying income taxes and that’s unfair,” he said. “This is an equity issue. You pay taxes but they don’t.”
Recto also said he personally favors “earmarking” of VAT proceeds to particular expenditures so that it would be clear to the people where the taxes go.
Teves said there also other efforts to raise revenues without having to impose new taxes, including privatization of assets, improving collection efforts, and attracting more business.
In the case of collections of the Bureaus of Internal Revenue and Customs, he said the government is updating the taxpayer database and implementing “fuel markings” to increase collections, he said.
He said the sale of government shares in Petron and Philippine National Oil Co.-Exploration Corp. (PNOC-EC) could generate an additional P40 billion.
The auction of Petron shares is scheduled next months and the government can get the proceeds by December, Teves said.
The sale of PNOC-EC shares could take place next year, he said, adding that depending on market conditions, the government could revive efforts to sell the Food Terminal Inc. and other real estate “but we will rely more on tax revenues.”
Teves also said the authority to borrow $500 million to $700 million remains despite the favorable news from the US but the government is still adopting a wait-and-see attitude.
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