Govt chief economist eyes taxes on idle assets, pollution

TAX administration won’t cut it. So said the government’s chief economist who mused that taxes on idle assets and pollution should be explored to raise additional revenues, which are needed for productivity-enhancing measures.

In a briefing last Wednesday, Socioeconomic Planning Secretary Arsenio M. Balisacan said the latter are just among the measures being implemented by “more mature economies” that allow them to improve government services and grow their economies.

Balisacan said that while better tax administration is necessary for the Philippines and can help shore up muchneeded revenues, it may not be enough to address the country’s financial requirements.

“If you ask for more services, more infrastructure, more health services, hospitals, education, more ayuda, we need to raise revenues. One way of course is improving the administration of taxes but [this] can only go so far,” Balisacan said.

Introducing new taxes, Balisacan stressed, should be progressive such that those who can afford to pay taxes should do so. He stressed that poor Filipinos should not be “overburdened” by these new revenue measures.

Ledac discussions

THESE proposals, Balisacan said, are among those being discussed in the Legislative Executive Development Advisory Council (Ledac), which is composed of the House and Executive leadership.

“Taxing idle assets or idle property, or those assets or goods that are pollutants, so there are many, many measures or forms of taxes that can be implemented and are used prominently in many more mature economies that we can also deploy,” Balisacan stressed.

These new measures can also help boost government spending. Based on data from the Philippine Statistics Authority, “Government Final Consumption Expenditure” contracted 1.8 percent in the fourth quarter and was flat at 0.4 percent in 2023.

Balisacan said to prevent this from being repeated this year is to “improve the coordination among planning, budgeting and implementation segments of the government cycle and across agencies.”

However, he said, the availability of government resources depends on the ability of the national government to generate revenues.

“I think that our ability to use fiscal measures to pump prime the economy depends so much also on our tax measures, our ability to generate revenues,” Balisacan said.

“That’s why we also emphasize the tax administration and our efforts to work with Congress toward coming up with new measures that are pro-growth and pro-inclusivity,” he added.

Hurting growth

EARLIER, local economists said there can be no doubt about the capability of efficient tax collection in raising revenues but in the Philippines, this could mean growth-hurting austerity measures and mounting debts while the government tries to make tax collection more efficient.

Former National Economic and Development Authority (Neda) Secretary Dante B. Canlas told Businessmirror that tax collection efficiency needs to be enhanced and that can help shore up revenues.

Canlas said attaining a deficit-togdp ratio of 3 percent and a public debt-to-gdp ratio of below 60 percent by 2028 would require slower government spending.

He said the Executive may also need to work with Congress on a “mediumterm budget” to improve the government’s chances of protecting its fiscal health.

Ateneo de Manila University Economist Luis F. Dumlao told the Businessmirror that improving tax efficiency can raise revenues but not trim the country’s deficit-to-gdp ratio to 3 percent.

Dumlao said raising taxes too soon may be too much as households could scrimp, leading to too much austerity.

De La Salle University Economist Maria Ella C. Oplas said new taxes could be an additional burden to consumers, especially amid rising inflation. Given this, Dumlao and Oplas want raising taxes postponed to the next administration in order to give consumers a reprieve.