P-Noy says no need for new taxes

MANILA, Philippines - President Aquino maintained yesterday that there is no need for new taxes. Instead, existing tax exemptions or incentives will be reviewed, he said.

In an interview with reporters after swearing in his new appointees in Malacañang, the President said a rationalization plan for fiscal incentives is being discussed.

Aquino also said the government would continue with its efforts to increase revenues by improving collections. At the same time, he said the government will do its best to rein in the budget deficit.

“At this present time, none of my economic managers are indicating that there is such a need (for new taxes). And again, the priority still is, improving the tax collection efficiency,” Aquino told reporters.

The President said there is a bill pending to lift certain tax exemptions to address the need for a better system of collection.

He said current incentives are “outdated, not realistic” compared to the others being given by the government.

Aquino said he has ordered his economic managers to study and review the fiscal rationalization plan of the government as well as tax incentives already given to multi-national companies in order to improve tax collection.

The International Monetary Fund has urged the Aquino administration to broaden its tax base and strengthen tax administration by overhauling its excise tax system on sin products and rationalizing its fiscal incentives to raise much needed revenue to bankroll social and infrastructure spending.

In its latest Public Information Notice, IMF said broadening the government’s tax base and strengthening tax administration is crucial in the Aquino government’s commitment to trim the budget deficit to two percent of gross domestic product starting 2013 from the current level of 3.3 percent of GDP.

“Achieving the deficit targets and increasing social and infrastructure spending will require substantial revenue efforts, including broadening the tax base and strengthening tax administration,” IMF stated in the notice dated March 1.

The executive board of the IMF recommended early actions to reform excise taxes, rationalize fiscal incentives and address gaps in the value added tax (VAT), complemented by reforms to strengthen the budgetary framework, and control of the civil service wage bill.