While the Philippines and the Asia-Pacific region as a whole suffered from a decline in tax revenues at the onset of the COVID-19 pandemic, the Organization for Economic Cooperation and Development (OECD) has advised against slapping new or higher taxes too soon.
“Raising taxes is not necessarily the good reaction, especially now when people are recovering from the pandemic,” the OECD grouping of rich nations told the Inquirer recently when asked about the fiscal consolidation pitch of the previous administration. The proposal was aimed at repaying the massive debt that piled up amid the prolonged pandemic, while narrowing the budget deficit.
President Marcos and Finance Secretary Benjamin Diokno are not keen on additional tax measures, although they plan to impose a 12-percent value-added tax on digital transactions and tax single-use plastics. They also plan to reform property valuation and capital market taxation— the two remaining packages under Duterte’s comprehensive tax reform program.
Diokno also wanted to improve tax administration through digitalization.
For the OECD, countries like the Philippines may consider other alternative modes to raise more money. “To finance the recovery, it will be a better policy to, for example, harness sources of financing such as green, social, or sustainable-related bonds, and enhance regional cooperation,” the OECD said.
“To develop these [bond] markets requires robust frameworks of classification and certification, dedicated regulatory frameworks, increasing the supply of sovereign bonds, etc.,” the OECD added.
At the height of the COVID-19 crisis, tax and non-tax revenues fell to P2.86 trillion in 2020 from the record-high P3.14 trillion in 2019. Millions of jobs were shed and thousands of businesses shuttered by stringent lockdowns. INQ