MANILA, Philippines - The Department of Finance (DOF) has recommended to the new administration a host of measures that would raise revenues and boost state coffers, including a major overhaul of the National Food Authority (NFA).
“We need to increase revenues through a combination of higher collection efficiency, improved tax administration, passage of revenue-enhancement measures, and privatization to create greater fiscal space for higher spending,” outgoing Finance Secretary Margarito Teves said in a report.
Teves said the government should pursue reforms in the state corporate sector to substantially reduce the fiscal burden.
Teves particularly cited the need to reform the NFA, the Light Rail Transport Authority (LRTA) and the Philippine National Railways Corp., which are buried in debt.
From January to May this year, the NFA received a total of P2.085 billion in subsidies from the government, used mainly to subsidize the agency’s mandate to sell rice at low prices despite buying this at high costs.
In the area of tax administration, Teves said the new administration needs to “continuously show results from tax administration measures and further enhance revenue collection through new measures so that we can restore the RVAT (Reformed Value Added Tax) gains which had been almost wiped out by revenue-eroding measures passed by Congress.”
He also reiterated earlier recommendations such as a gradual increase in the VAT rate to 15 percent from 12 percent, with a corresponding reduction in the personal and corporate income tax to 25 percent from 30 percent.
TheArroyo administration ended its term with a budget deficit of P162 billion, more than the January to June target of P145.2 billion only five months into the year and the budget gap in the same period last year of P123 billion.
In May alone, the deficit hit P30.5 billion or more than double the P11.4-billion deficit incurred in the same month last year.