FILE PHOTO: Sherwin Gatchalian. Senate PRIB
The country’s national debt reached a record-breaking P12.763 trillion at the end of April, or P1.7 trillion more than its debt load in April last year and the highest in 17 years, the Bureau of the Treasury reported on Thursday.
But Sen. Sherwin Gatchalian, who is poised to become the Senate ways and means committee chair in the 19th Congress, urged the incoming administration of President-elect Ferdinand Marcos Jr. not to raise taxes or impose new ones.
Gatchalian said that the incoming Marcos administration should instead focus on the Bureau of Internal Revenue and the Bureau of Customs, two of the country’s top revenue agencies, but also the most notoriously corrupt.
The country’s latest debt data brought its debt-to-gross domestic product (GDP) ratio, or the proportion of debt to the country’s total production, at 63.5 percent, more than the globally accepted threshold of 60 percent of GDP.
In per capita, each of the country’s more than 109 million citizens, including babies, already owe more than P117,000 each, or 70 percent of the annual income of a minimum wage earner in Metro Manila.
Funding
But Undersecretary Tina Rose Canda, acting secretary of the Department of Budget and Management (DBM), said Filipinos have nothing to worry about.
“Debts are nothing to be afraid of if there was a reason why we borrowed. We know that at the time the COVID-19 [pandemic] struck more than two years ago, we didn’t have isolation hospitals, we didn’t have enough isolation beds,” she said.
“We can’t sacrifice the lives of our countrymen just because we don’t want to borrow,” said Canda, who also admitted that the DBM had already disbursed 90 percent of the government’s 2022 budget, although it’s only the first half of the year.
The acting secretary, a career DBM official, said the government would be able to find ways to fund services and pay for the national debt, adding that the government can impose new taxes to fund a supplemental budget.
But Gatchalian frowned on the raised and new taxes outlined in the fiscal consolidation program—a menu of possible tax measures—that the Duterte administration proposed to the incoming Marcos administration.
Corruption
“We should not raise taxes while corruption persists in the government,” Gatchalian said. “I am aware that many of our small and medium enterprises are falling prey to unscrupulous government personnel.”
“In my view, while I am aware that government collection is an important matter, we must first do something about the problem of corruption before we start discussing higher taxes,” he said.
Incumbent Central Bank chief Benjamin Diokno, the incoming finance secretary, had already said that the Marcos economic team is happy with the current tax structure and new taxes will be studied doubly hard.
Diokno said he was satisfied with the last two tax reform packages passed by Congress, namely the tax packages on real property valuation and passive income and financial taxes.
“Other than that, we should stop first looking at tax reform … we are happy with the present tax structure,” Diokno said.