Finance official urges Aquino to raise new taxes

President-elect Benigno Aquino III should take advantage of the optimism, during his first 18 months in office, to raise new taxes, Finance Undersecretary Gil Beltran said Thursday. Aquino should take advantage of the goodwill that accompanies a new regime and raise much-needed revenues to fund infrastructure projects and social services, Beltran said. The new government has more chances of passing new fiscal policies, because Aquino now enjoys a high level of confidence, Beltran said. "It's the best time, actually...I hope they won't (miss the opportunity)," the finance official said. "New tax measures should be put in place within the first 18 months because elections would follow after three years, at which time people may no longer be as keen on these policies," Beltran said. "One year before the elections, no tax measures will ever be passed in practice. You have a limited window to do it. If you lose that, you are left with no other choice. We will just have to make do with tax administration," Beltran added. Government needs additional revenues because the 14th Congress had passed many revenue-eroding measures, such as the lifting of import duties on oil, Beltran explained. The proposed reforms on the excise tax on tobacco and cigarettes as well as petroleum products could generate up to P40 billion, according to the Finance department. Incentives from the government's rationalization program, as recommended by the Budget Department, could bring in an additional P10 billion, and the Simplified Net Income Taxation System (SNITS) some P5 billion. Economists from the University of the Philippines School of Economics are also pushing for a higher value added tax and the lowering of the income tax, Beltran pointed out. Finance has proposed to raise the Expanded Value Added Tax (E-VAT) to 15 percent from the current 12 percent at 1-percent gradual increases per year. Finance Secretary Margarito Teves said the government stands to generate P11 to P30 billion in the first year, P30 billion in the second year, and P40 to P50 billion in the third year with the new EVAT rates. The Aquino government needs to impose new tax measures if it wants a deficit equivalent to 5 percent of gross domestic product, just like the deficit-to-GDP ratios of neighboring countries, according to Beltran. In the end, he said that the Aquino administration would have no choice but to raise taxes if it wants to offset the tax breaks given by Congress and fund urgently needed social services. One of Aquino's many campaign promises was that he had no plans of imposing new taxes. —Nikka Corsino/VS, GMANews.TV