Tuesday, February 16, 2010
After the Philippines’ President, Gloria Macapagal Arroyo, signed the law confirming the national budget for 2010, the present Finance Secretary, Margarito Teves, said that the new government, after the general elections in May, will need to pass additional tax measures to provide additional revenue.
The government has disclosed that its fiscal stimulus policies would be continued in 2010, but at a reduced rate given that economic activity has begun to pick up. However, the public sector deficit for this year, budgeted at PHP293bn (USD6.3bn), equivalent to 3.5% of gross domestic product, would be similar to the PHP290bn deficit expected to have been seen in 2009. The latter would be much higher than its original PHP250bn target.
Teves has, in any case, stated that, if tax collections are to reach their projected outturn in 2010, a new government would need, not only to pass the revenue-raising bills already before parliament, but also to introduce new measures, if the budget deficit is to be achieved.
He suggested PHP60bn has already been lost in revenue following recent tax reducing measures passed by parliament, particularly the income tax breaks for individuals and businesses.
While the improvement of tax administration would form a large part of the government’s campaign to raise tax revenues in 2010, he noted that the pending tax measures before parliament (including an increase in excise duties on cigarettes and alcohol, and a decrease to corporate tax reductions) only add up to PHP36bn, leading to his call for new tax-raising policies to be devised as soon as possible.