Philippines President Prepares To Dispense Bitter Tax Pill

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

20 September 2004

With the country on the brink of a deficit crisis, Philippines president Gloria Arroyo is reportedly planning to forge ahead with plans to increase taxes, despite evidence that there is widespread opposition to the proposals.

Warning that the country is on the brink of an Argentine style economic crisis, Arroyo has warned that the country faces “death throes” in two years time unless it somehow raises more than 180 billion pesos (US$3.2 billion) in additional tax revenues.

"I am not a stranger to unpopularity, but I cannot shrink from the responsibility of prescribing the bitter pill," Arroyo commented in a speech last week.

"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," she argued.

The population it seems, are not ready to take their medicine now. A nationwide survey by the research institute, Pulse Asia, revealed last Wednesday that 78% of the population "see no need to impose new taxes." However, the survey also found that 30% would be less hostile to paying more tax if there was a palpable improvement in public services.

According to a Presidential spokesman, most of the new tax will be extracted from those most able to pay.

"On the basis of these principles, we are working with Congress on a fair and equitable tax program,” the spokesman revealed in a statement.

Congress is expected to pass at least four of eight tax measures, including higher taxes on oil products, by the end of the year.

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