No new taxes

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    Recycling goes on. A junk shop in Manila loads recyclable wastes onto a truck in Manila on Oct. 9, 2020. The use of paper and plastic containers has been fuelled by the prevalence of takeout and delivery services.

    The Department of Finance (DOF) is not looking at new taxes at this time despite the recent decline in government revenues amid the coronavirus disease 2019 (COVID-19) induced crisis.

    “We are not really seriously considering any taxes,” Carlos Dominguez, DOF secretary, said in a virtual interview with Bloomberg.

    “Taxing our citizens when their incomes are down is not a good idea,” he added.

    Last month, the finance chief said the government is eyeing additional sources of revenue in the remaining period of the administration, amid the debt incurred due to the crisis brought by the pandemic.

    Dominguez then said the government will start looking at additional revenues sometime in late 2021 or early 2022 to pay for the heavy indebtness being incurred this year.

    As to selling assets, Dominguez said the government is “not that desperate yet.”

    “Most of our assets are in real estate and in mining operations. Quite frankly the real estate market is uncertain at this point although it has been holding quite well,” Dominguez said.
    Domiguez said earlier this month he has asked the Privatization Management Office to work on the privatization of state mining assets.

    Meanwhile, Dominguez said in the same interview the balance of the credit line from the Bangko Sentral ng Pilipinas (BSP) is one of the funding options of the government, but the top option is still the commercial market.

    “We keep that in reserve. Our first option is to go back into the commercial market. But if the economy doesn’t perform as we expect (next year) we will go back to them,” Dominguez said.

    “At the moment we don’t’ need to do that… we believe that our current borrowing program and our current revenue flow, which incidentally is eight percent over our latest estimates for tax revenues is going to hold us a bit. We’re keeping the balance of credit line with the central bank in reserve,” he added.

    The BSP, last October 1, approved the request of the national government for “fresh provisional advances” worth P540 billion.

    Benjamin Diokno, BSP governor, then said the national government will settle the P540 billion “on or before December 29, 2020 at zero interest.”

    At the onset of the lockdown measures imposed last March to combat the COVID-19, the BSP also lent P300 billion to the national government under a repurchase agreement “with a maximum repayment period of six months.”

    Diokno said the Bureau of the Treasury has fully settled the amount on September 29.

    Considered as the lender of last resort, the BSP may make direct provisional advances with or without interest to the national government to finance expenditures authorized in its annual appropriation, pursuant to Section 89 of Republic Act No. 7653 or the New Central Bank Act.