Next administration urged: Sell assets to pay gov’t debt

The head of the ways and means committee of the House of Representatives is encouraging the administration of presumptive president Ferdinand Marcos Jr. to sell assets including the Ninoy Aquino International Airport (NAIA) and some portions of Manila Bay to raise about P500 billion for debt payments.

Rep. Joey Salceda told The STAR that the next administration would be forced to remove value-added tax (VAT) exemptions that would hurt vulnerable sectors if it opts not to privatize public assets to raise much needed revenues.

The incoming administration is set to inherit a debt stock of about P13 trillion as of March and a debt-to-gross domestic product (GDP) ratio of 63.5 percent, above the international standard of 60 percent.

Aside from lifting VAT exemptions granted to certain sectors like cooperatives, senior citizens and persons with disabilities, Salceda said that the next administration could borrow yet again to pay for its arrears.

By taking away VAT exemptions, Salceda said the government stands to gain up to P600 billion that it can use for debt payments in the next five years.

However, he warned that legislation will face a consolidated opposition from lobby groups who are bound to lose their tax privileges.

“Without the privatization of crown jewels like NAIA and Manila Bay, it would be painful to raise the needed revenues for our debt service. It would demand that we hit special sectors benefitting from VAT exemptions, the removal of which would generate for the government P600 billion,” Salceda said.

Salceda warned that the country’s debt stock, when measured against the GDP, could swell to a high of 69 percent should the government decide to borrow more to pay off its pandemic debts.

The legislator, who served as economic adviser to Gloria Macapagal-Arroyo during her presidency, said it would require extraordinary measures to cut a debt-to-GDP ratio of that level.

Salceda prepared several of the fiscal measures that the Arroyo administration had to pursue to bring down the debtto-GDP ratio from an all-time high of 71.4 percent in 2004.

Based on estimates, Salceda said the next administration has to secure P1.6 trillion in additional revenues in the next five years, or P326 billion every year to reduce the debt pile.

However, the government needs to allocate P181 billion for interest payments and P144 billion for amortization.

Apart from privatization, Salceda said the government has to raise at least P900 billion through organic flows that provide recurring income through taxation, unlike privatization where onetime gains are made from the sale of state assets.

The lawmaker said the government could generate P210 billion in taxes in the next five years if it resumes the operation of e-sabong that was recently suspended by President Duterte.

The government could also bring in another P200 billion by increasing the motor vehicle user’s charge that was last adjusted nearly two decades ago, in 2004.

Salceda proposed that an entry fee of $100 for every 24 hours of play in casinos be put in place to raise P93.6 billion from gamblers in the next five years.

Last week, Rizal Commercial Banking Corp. chief economist Michael Ricafort told The STAR that excise taxes on sin products and sugary drinks can be increased again.

The Tax Reform for Acceleration and Inclusion Law slapped a tax of P6 per liter on beverages containing caloric and non-caloric sweetener and P12 per liter on drinks with high-fructose corn syrup.

Republic Act 11346, signed in 2019, charged an excise of P45 per pack on cigarettes, going up by P5 every year until 2023. Afterward, the rate will rise by five percent every year starting 2024.

Salceda, however, said it could be difficult to legislate additional taxes on cigarettes, as the next Congress is allied with the ruling party which hails from Ilocos Region.

Ilocos Region, the bailwick of the Marcoses, produces close to two-thirds of tobacco leaves sold in buying stations.