The Marcos administration has no plans to cut public spending to temper the country’s growing debt load, the new head of the Department of Finance (DOF) said Monday, June 6.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, who is President-elect Ferdinand R. Marcos Jr.’s choice for the finance post, said the next administration is sticking to the government’s budget deficit reduction plan. government to 3% by 2028.
But Diokno made it clear that taking budget cuts as part of the government’s fiscal consolidation program is an option for the new administration.
He said the Duterte administration’s “Build, Build, Build” program should be maintained, but at the same time the new administration should focus on the government’s efforts to generate enough tax revenue.
Diokno believes that the tax reforms initiated by President Duterte over nearly six years provided the incoming administration with enough space to generate additional revenue to support the same level of public spending.
“Traditionally, when there was a problem like this, he would prescribe budget cuts. I don’t buy this idea. I think we should continue with our ‘Build, Build Build’ program, and because of the pandemic I think we should continue to invest in human resources,” Diokno said in an interview with the ANC.
“There shouldn’t be any cuts in our spending plan, I think we should really focus on raising taxes enough,” he added.
Under the DOF’s fiscal program, the national government is expected to reduce its budget deficit ratio from 7.6 percent for 2022 to 6.1 percent next year, then to 5.1 percent in 2024 and 4.1 in 2025, the official said.
“Our goal is to bring it down to 3% by the end of the Marcos regime. I think the challenge remains of course, we have to increase their sufficient income,” Diokno said.
With a better tax system today, Diokno said he is confident the new administration will be able to raise enough taxes to ensure the government meets its budget deficit ceiling targets.
However, Diokno added that there is room for improvement in tax administration, especially in the digitization program of the Internal Revenue Bureau and the Customs Office.
“There are opportunities to improve tax collection using technology,” Diokno said. “When you make the tax system very difficult for taxpayers, that’s not good. You have to make it taxpayer friendly. So it’s done electronically,” Diokno said.
“Although I said that there is a better tax system than the previous one, it is not perfect. It could be improved. But for me, the focus really should be first to implement the new tax system and see if we have when there is a need for further reform,” he added.
Last week, the Treasury Office reported that outstanding government debt continued to rise, reaching 12.679 billion pesos in April 2022, compared to 10.991 billion pesos in the same month last year.
The debt burden at the end of April is also higher than the 12.679 billion pesos recorded the previous month.
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