Outgoing Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno, the incoming chief of the Department of Finance (DOF), expressed his disagreement with the proposed tax amendments by the finance department. Instead, he noted that the DOF must focus mainly on the government’s tax administration during the first year of President-elect Ferdinand R. Marcos Jr.
Diokno stated that he is not worried about the government’s expanding debt, he stressed that the economy can “easily” bring it down once the country’s gross domestic product (GDP) grows by at least six percent to seven percent.
“I’m not worried about the level of the debt for example, that’s 63 percent. That’s easily manageable,” Diokno told ABS-CBN News Channel (ANC) in an interview last Friday, May 27.
Being the current Bangko Sentral ng Pilipinas (BSP) governor and with his more than 30-year experience in finance, Diokno explained that he has seen all the crises that struck the country, including its debt level of close to 100 percent of GDP. He noted that “we’re in a better place right now.”
Considering the comprehensive tax reform programs implemented under the Duterte administration, including the Tax Reform for Acceleration and Inclusion (TRAIN) and Corporate Recovery and Tax Incentives for Enterprises (CREATE) laws, Diokno believes; “I think we should stop first looking at the tax reform. What I’m saying is we are dealing with a present tax structure’s implementation.”
Diokno’s sentiments may counter the outgoing Finance Secretary Carlos G. Dominguez III’s fiscal consolidation and resource mobilization program which includes a recommendation to raise and introduce new taxes, which includes taxation on cryptocurrency by 2024, to pay off the P3.2 trillion debts incurred during the prolonged Covid-19 pandemic. (Read more: Dept. of Finance Proposes Crypto Tax by 2024 in the Philippines)
The DOF estimated that the proposed fiscal consolidation plan, once implemented, would give the upcoming administration an incremental revenue of around P349.3 billion per year.
With the debt-to-GDP ratio standing at 63.5 percent a the end of March, the highest since 2005 and above the 60-percent internationally prescribed best practice for emerging markets like the Philippines, Diokno guaranteed that the Marcos administration can “easily” outgrow the debts. He noted that the current GDP is mostly held by domestic creditors, not by foreign lenders unlike in the past.
“Our problem really is how to get back to our growth trajectory, because that will solve a lot of problems… If we grow at six to seven percent, that solves our tax revenue problem, that will solve our deficit problem, that will solve our debt problem, that will solve our concern for poverty reduction,” he stated.
However, Diokno emphasized that everything will depend on the country’s capacity to grow its economy in the coming years.
“So our focus should be how do we make all sectors grow, because there are some laggards like agriculture, it has not (been) growing all these years. We have to focus on that. Mining was stopped for a while. It is now back… We have to make sure that all sectors of the economy will grow,” he concluded.
This article is published on BItPinas: Incoming DOF Chief Disagrees on Proposed Tax Reforms Which Include Crypto, Digital Goods
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