Finance Secretary Carlos Dominguez III has crunched the numbers on how the Philippines can pay off its piling debts due to the COVID-19 crisis, with short-term borrowings already due in 2023.
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The math revealed that the government needs “at least P249 billion every year in incremental revenues,” or else get caught in deeper debt and put the country’s credit ratings at risk.
“Our best option is to expand fiscal space through new taxes and improve tax administration and enforcement,” read Dominguez’s fiscal consolidation and resource mobilization plan published Wednesday, May 25.
This is also part of transition talks for the incoming Marcos Jr. administration.
Based on his estimates, Dominguez plans to source about P142.5 billion from the repeal of existing exemptions to the 12% value-added tax (VAT), keeping the perk only for education, farm products, health, raw food, and the financial sector.
The next major fund source would be the deferment of reduced personal income tax rates for three years from 2023 to 2025 — which would mean smaller take home pay for lower to middle-income earners.
Additional taxes are also proposed for alcopops, while even higher excise taxes are planned for cigarettes, e-cigs, and even sugar-sweetened drinks for a P91.4 billion annual tax take.
Will Marcos Jr. and his Finance secretary take Dominguez’s advice?
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