A DAY after the country’s tax chief gets axed for a budgetary shortfall in May that was blamed on disappointing collections, Finance Secretary Margarito Teves said there is no need for new taxes to cut the national budget deficit.
Teves instead told participants of the Euromoney 2nd Philippines Investment Conference yesterday that what is needed is for government to continue practicing fiscal prudence, improve tax collection efficiency and pursue further privatization of its assets.
He cited the country’s high gross domestic product (GDP) growth in the first quarter of the year, the continued strengthening of the peso and buoyancy in the domestic market but made no reference to last May’s budget shortfall of P1.7 billion.
In his keynote address during the opening of the Euromoney conference, Teves said the National Government will continue to implement fiscal reforms for the country to achieve “greater economic expansion.”
Income tax
He said that while the country faces challenges to sustain economic growth, there will be no need for new taxes. Instead, he said that what is needed is a combination of measures that include the rationalization of the income tax on self-employed individuals, improving revenue collection and accelerating the sale of government assets.
“Mangita ta og paagi kay daghan man ma-collect gikan sa mga self-employed,” Teves said in an interview. He added that about P4 billion to P5 billion can be collected from self-employed individuals. (We’ll look for ways because a lot can be collected from the self-employed sector.)
Teves said government will also complete the sale of its stake in San Miguel Corp. (SMC), Manila Electric Co. and the Philippine National Oil Co.-Energy Development Corp. and the power generation assets of the National Power Corp.
The government is bidding out power generation assets in Masinloc, Zambales Province and Calaca, Batangas, among others. It also plans to sell its 24-percent stake in SMC, which is valued at about $1.2 billion.
After all these, Teves said government will review the situation to find out if there is a need for new taxes.
The National Government announced earlier this week a budget shortfall of P1.7 billion in May as its tax collection failed to equal spending. The government is targeting a budget deficit of P63 billion for the year, or less than one percent of the gross domestic product, but the gap between revenue and expenditures from January to May alone has already reached P41.8 billion.
Sin products
President Arroyo fired International Revenue Commissioner Jose Mario Buñag last Wednesday following the tax collection shortfall report.
During the Euromoney conference, SMC president and chief operating officer Ramon S. Ang proposed increasing taxes on sin products.
He said there are not enough taxes imposed on sin products like cigarettes and liquor.
Despite doubts voiced by the Congressional Planning and Budget Department that the country will be able to sustain the 6.9 percent growth in GDP in the first quarter of this year, HSBC Philippines president and chief executive officer Mark Watkinson said the universal bank is “very, very bullish” about the country’s economic growth.
He said this is why HSBC is pouring more investments in the Philippines. He added that HSBC plans to expand its business process outsourcing operations in the country by about 4,000 employees from the current 5,500 by end of 2008 as well as its banking arm.
HSBC already has two branches in Cebu.
Watkinson said the “phenomenal” economic development in the country in the past two to three years “fills us with confidence.”
In his keynote speech, Teves said the country will only be able to sustain economic growth with the help of the private sector. (LAP)
