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Teves Advises Aquino To Increase Philippine Taxes

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

09 August 2011


The Finance Secretary in the previous government, Gary Teves, has said that President Benigno Aquino should look at increasing taxes in the Philippines sooner rather than later.

Teves considers that such revenues are needed immediately, so as not to waste time in providing funds for development projects and to convince the rating agencies to give the Philippines an investment grade rating at an earlier date, which would then also attract further foreign capital inflows and stimulate growth in the economy.

However, when he assumed office in June last year, Aquino had stressed that, to reduce the country’s then-increasing fiscal deficit, the collection of taxes should be improved before there was to be any thought of increasing tax rates, or of any new taxes.

He has also reiterated that view recently, as the current government believes there are still significant increased revenues to be garnered by improving tax administration - by strengthening the authorities’ powers to collect unpaid taxes and chase tax evaders. In fact, the country’s fiscal deficit was sharply down in the first half of this year, and appears to be on track for a reduction to 2% by 2013.

However, Teves believes that, while the government’s tax administration improvement policy is praiseworthy, it is taking too much time to produce results. There is much that could be gained, he says, by combining it with new tax measures to provide additional revenue. Such measures, he considers, would now be available to the president given his continued popularity in the country.

TAGS: tax | economics | fiscal policy | Philippines

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