Philippine Government Announces Eight Tax Measures To Balance Budget

by Mary Swire, Tax-News.com, Hong Kong

12 January 2005

The government of the Philippines has announced that the budget could be balanced by 2008 if eight new tax measures are accepted.

“Perhaps if we really are successful in raising more revenues, I would imagine 2008 is a big possibility [for a balanced budget] but we have to see all these bills passed first,” Finance Secretary Juanita Amatong told a press briefing after a meeting with Japanese officials.

Among the measures designed to bolster tax revenues are a two-tiered value-added tax system, a windfall tax on telecommunications income, a general tax amnesty, and the paring back of certain fiscal incentives. New ‘sin taxes’ on tobacco and alcohol have already been passed into law.

The Philippine government has been forced to take some drastic measures on the fiscal front after President Gloria Arroyo warned last year that the country was on the brink of a deficit crisis and could undergo “death throes” in the next two years unless action was taken.

"We can not postpone the pain, (it's) better to have some pain now and feel the gains two years from now than postpone the pain now," Arroyo announced last September.

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