From the News! – Your Daily News

Angelo S. Samonte
Manila TImes

THE World Bank is pressing the government to muster enough political will to push for tax reform, warning the Philippines could find itself faced with a budget-deficit blowout similar to what it suffered in 2004.

Joachim von Amsberg, the multilateral lender’s country manager, said that if the strong drive of the past few years wanes, then revenue generation would fall behind. “The stalling of revenues could be a critical element to that falling behind then it is easy to see how the recent direction and built confidence and credibility can quickly collapse,” he said.

Investments that are foreseen to rise in the next years will no longer materialize, even as growth and poverty reduction efforts would falter, he said. This is one of two different scenarios the lender foresees after three years.

But the Philippines could still build on the reform momentum of the past few years, and pursue reforms that would raise investments from both private and public. “Bring about growth, bring about the creation of jobs, bring about poverty reduction that will strengthen the population’s commitment to reforms,” von Amsberg said.

“The Philippines will firmly establish itself as part of the dynamic East Asia that is rapidly growing and reducing poverty. The ability of the Philippines to invest in public services is a critical ingredient for this scenario,” he said.

To achieve this, it is necessary that the recent weakness in revenue collections be reversed, he said, adding the last two to three years have generated some credibility and confidence that needs to be sustained.

“Investors’ confidence for the Philippines is still very low so the question is, what policies can increase the confidence so that level of investment rates will pick up very significantly?” he said.

Von Amsberg said the current year is important because it will be the time to demonstrate that the weaker-than-expected tax collection in the first quarter was just a blip on the screen. But reversing this trend will require extraordinary determination on the part of government, he said.

On Thursday the Bureau of Internal Revenue (BIR) launched the National Program Support for Tax Administration Reform (NPSTAR), a World Bank-supported project, aimed at maximizing tax compliance.

The NPSTAR will come up with a comprehensive program in strengthening BIR’s reform program by entrenching the bureau’s reform agenda.