MANILA, Philippines—Former Finance Secretary Margarito Teves, now chairman of a private think tank, said the Aquino administration should reconsider its position against the implementation of new tax measures.
The measures Teves is pushing include the rationalization of fiscal incentives and increase in the taxes on cigarettes and alcohol.
In a chat with reporters Wednesday night, Teves said the stance of the current administration against the adoption of new tax measures would lead to wasted opportunities, such as enhanced ability to spend for vital development projects and earlier-than-expected attainment of an investment-grade credit rating for the Philippines.
Teves said raising more revenues from new tax measures would make it easier for the economy to achieve the fighting growth target of 7 to 8 percent.
“Hitting a 7- to 8-percent growth will be very difficult without new tax measures,” he told reporters.
The former finance chief said the Aquino administration’s tack to raise revenues by improving tax collection efficiency was laudable. He said, however, that this should be combined with other strategies, such as new tax measures and privatization.
Teves said that relying on tax administration alone would not meet the urgent need to raise more revenues.
Teves added that pushing for these measures should not be difficult for the President given the prudence of those moves.
Teves said the President could take advantage of his high popularity rating in pushing for important tax measures, the immediate adoption of which would help the country achieve an investment-grade credit rating earlier than the target of 2013.
With his popularity, the President can convince the public of the necessity of the tax measures.
“He [the President] is using his popularity to push for the reproductive health bill; I can’t see why he cannot use it to push for important tax measures,” Teves said.
Without these measures, Teves said, the economy can grow by only 5 to 6 percent, at best, over the short term. Such a growth rate, however, would not be sufficient to reduce unemployment and poverty incidence.
A growth rate of 5 to 6 percent, Teves said, would not help the economy absorb the additional entrants to the labor force every year.
Teves said the government would be able to convince more foreign investors to invest in key infrastructure projects if the state would also invest in those.
Teves said, however, that it would be difficult for the government to invest sufficiently in expensive infrastructure projects if it did not have enough revenues.