CEBU, Philippines - The Philippines remains behind its ASEAN (Association of Southeast Asian Nations) peers in terms of infrastructure, an area the country should continue to invest more.
Finance Secretary Carlos Dominguez III said at the recent ASEAN meetings in Cebu that investing heavily into infrastructure would protect the country from the adverse effects of globalization and emerging inward-looking trade policies across the globe.
“With us, we are countering these inward-looking policies by heavily investing in infrastructure, which we are really far behind the rest of ASEAN,” he said.
He noted that infrastructure is a main tool, as it will create better jobs in the areas outside of main business areas and create connectivity.
He earlier said the government would have to spend some $180 billion or about P8 trillion between now and 2022 to close the massive infrastructure gap, which would, in turn, help ensure that the poorest communities in the country have fair access to quality goods and services as well as business opportunities.
But to carry out this massive infrastructure buildup, the government cannot continue making do with low revenue collections, brought about by a complicated, unfair and inefficient tax system, he said.
The Finance department is pursuing a comprehensive tax reform program to establish a more efficient tax system, which is aimed to help close the infrastructure gap by raising more state revenues.
“Our society needs to invest in infrastructure if we are going to take that next big step to bring ourselves to middle-income status and finally to high-income status,” he said.
Dominguez said that when the DOF was studying ways to boost revenue collections, one thing that stuck out was that excise taxes on petroleum products have not been adjusted to account for inflation for almost 20 years now, despite the low prices.
He said with generally a low inflation rate, low interest rate, stable currency, and a low price of fuel, it could be high time to adjust fuel taxes.
“So with all these favorable factors, we think that now is the time to adjust the taxes on fuel to reflect the erosion in the value of money,” Dominguez said.
He pointed out that increasing the excise tax on fuel would translate into a retail price that is still below what it was two and a half years ago.
A study of DOF also showed that the top 2 million households or the richest 10 percent account for almost 60 percent of fuel consumption, while the richest 1 percent or about 200,000 households consume 20 percent of petroleum products, he said. (FREEMAN)