No tax hike in near term, says finance chief
President Duterte’s chief economic manager on Wednesday said that despite weak government revenue collections and surging borrowings, the Philippines would neither increase taxes nor dispose of big-ticket public assets in the near-term.
“We are not really seriously considering any taxes. Taxing our citizens when their incomes are down is not a good idea,” Finance Secretary Carlos Dominguez III said in an interview on Bloomberg TV.
“As to selling assets, we are not that desperate yet. Besides, most of our assets are in real estate and in mining operations and quite frankly, the real estate market is uncertain at this point, although it has been holding up quite well,” Dominguez added.
Last month, Dominguez said the government by late 2021 or early 2022 would look for additional revenue sources “to pay for the heavy indebtedness that we are incurring this year” to better respond to the health and socioeconomic crises inflicted by the COVID-19 pandemic.
Last week, the finance chief said the government was eyeing the privatization of at least a couple of mining assets not only to raise revenues but also to revive the industry and thus create jobs in rural areas.
Dominguez said year-to-date revenue collections were above-target by about 8 percent, although this year’s goal had been scaled down amid the pandemic-induced recession.
“We believe that our current borrowing program and our current revenue flow … are going to hold us up a bit,” Dominguez said.
The finance chief said that in the meantime, the national government would keep the balance of its credit line with the Bangko Sentral ng Pilipinas (BSP) in reserve.
On top of the latest P540-billion advance it received from the BSP under their repurchase agreement, the government had programmed P1 trillion in short-term borrowings from the central bank next year.
“We keep that in reserve. Our first option is to go back to the commercial market. But if the economy doesn’t perform as we expect, we will go back to them (the BSP),” Dominguez said.
The government had programmed to borrow over P3 trillion each this year and next year to finance health and medical response as well as economic recovery.
Separately, Dominguez said the Philippines would first review the terms of the World Bank’s new $12-billion facility for COVID-19 vaccines before it would decide on whether to tap the financing program.
The World Bank’s Washington-based board on Oct. 13 approved the funding, which developing member-countries like the Philippines could dip into to buy and distribute vaccines, tests, as well as treatments to COVID-19 infection.
For Dominguez, there was no more need for another package of pandemic relief as “we are seeing a very strong recovery as we ease up the economy.”
“As we open up, we can see a very strong recovery through jobs,” Dominguez said, adding that the government was targeting to bring down the jobless rate to 5-6 percent from 10 percent in July and the record 17.7 percent in April at the height of the longest and most stringent COVID-19 lockdown in the region. INQ
