‘The matter of raising money to pay the country’s debts is sensitive because new taxes and deleting some tax exemptions, especially the value-added tax privileges of senior citizens and persons with disabilities, are both seen as unpopular acts that will have a telling effect on BBM’s political support.’
THE speedy canvassing of votes by Congress was over in two days, and now we have two duly proclaimed leaders who officially won the 2022 elections — President-elect Ferdinand “Bongbong” Marcos Jr. and Vice President-elect Sara Duterte-Carpio.
With the elections over and while waiting for his inauguration on June 30, Marcos has to buckle down to work and assess the enormity of the nation’s financial problem: with mounting debts of more than P13 trillion as of last March, a still-recovering economy and business community already saddled with taxes to pay, a virus that has not yet been officially declared as behind us, and the prospects of greater inflation and high energy and commodity prices owing to the war in Ukraine, etc.
These piles of debts were incurred when President Duterte started a borrowing spree to fund the nation’s response to the COVID-19 pandemic, and so it behooves his administration to present some ideas or road map for consideration of the incoming Marcos administration to solve the problem.
The fiscal consolidation plan, prepared by the Department of Finance headed by Secretary Carlos Dominguez, suggests the imposition of new taxes in the next three years while some existing tax exemptions would be removed to bolster government revenues.
The matter of raising money to pay the country’s debts is sensitive because new taxes and deleting some tax exemptions, especially the value-added tax privileges of senior citizens and persons with disabilities, are both seen as unpopular acts that will have a telling effect on BBM’s political support.
This must have been in the mind of Rep. Joey Salceda, head of the House Ways and Means Committee, when he suggested that Marcos should instead consider the sale of government assets including the Ninoy Aquino International Airport (NAIA) and portions of Manila Bay for reclamation to raise some $500 billion for debt payments.
This suggestion, which some pundits consider as out-of-the-box but practical, was rejected early on by Bongbong Marcos who has shown his preference for solving the debt woes by conventional ways.
Filipinos, therefore, should expect more new taxes to be imposed by the government. Since legislation is needed in implementing this, it will take some time before actual new money is raised. Another option is to borrow more from sources abroad, which will just buy us some time but will eventually be disastrous in the long run, as the Philippines’ credit rating will fall and the cost of future borrowings will be higher.
What an unenviable position for Marcos, but the nation will have no recourse but to back him because that is the mandate given the new President by some 31 million Filipinos.
