NextGen Day

MANILA – According to a House leader, the incoming administration will require roughly PHP326 billion in fresh income each year to cover both principal and interest payments on debts accrued during the coronavirus disease (Covid-19) outbreak.

Committee chair in the House of Representatives Presumptive President Ferdinand “Bongbong” Marcos Jr., according to Joey Salceda, may use his “supermajority in both mandate and congressional coalitions” to enact sensible, effective tax and economic policies to handle the PHP12-trillion debt burden.

According to him, annuitizing the debt service due to deficit spending will cost the government PHP144 billion in principal payments and PHP181 billion in interest payments from January 2020 to March 2022.

“Unless we can raise that kind of money, we’ll have to cut government spending or borrow more to pay down the debt,” he warned. “Obviously, budget cuts aren’t a good option if you want to keep Covid-19 growing, and borrowing more to repay previous borrowings is a downward spiral into fiscal hell.” So you’ll need to increase your financial capacity.”

He believes that the sooner the Marcos administration begins a fiscal expansion program, the better for investor confidence, credit ratings, debt overhang, and future growth prospects.

“Money is required to fulfill the most crucial campaign promises: cheaper rice, more efficient government services, and improved agriculture. So, in the first hundred days, I would recommend taking rapid and effective fiscal reforms,” he stated.

He proposed taxing the digital economy to increase tax collection from digital transactions.

“According to BIR data, the digital economy grew by at least 16 percent throughout the pandemic, while tax income from digital sources remained virtually flat.” He stated, “We can accomplish it on both the policy and tax administration sides.”

He also emphasized the importance of bolstering the Arroyo administration’s tax enforcement policy, which included RATE [Run After Tax Evaders], RIPS [Revenue Integrity Protection Service], and RATS [Run After the Smugglers].

He added that there should be better enforcement agreements with the Coast Guard on conventional smuggling and the Department of Agriculture on technical smuggling.

“The Bureau of Customs gets a poor rap during elections, but under Commissioner Rey Guerrero, they’ve been steadily improving because of technological changes, enforcement operations, and a general commitment to making customs compliance easier. So, I’d either maintain him where he is or enhance and institutionalize the advances in customs that he has done,” Salceda said.

Salceda said he would ask the new President to develop three new internal reforms in the Bureau of Internal Revenue (BIR) processes: the formation of a digital taxation service, the creation of a transfer pricing service, and the convenience of paying taxes reforms.

He specifically mentioned that the value-added tax refund processes should be streamlined, that tax identification number registration should be fully digitalized, and that the electronic invoicing mandate established by the Tax Reform for Acceleration and Inclusion (TRAIN) law should be fully implemented.

“Of course, we need to enact new tax policy reform packages,” Salceda added, “but the policies I described are the easiest to implement, and the President may take steps toward them by executive action.”

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