By Genalyn Kabiling
The government will be compelled to borrow money if Congress won’t pass the proposed second package of the tax reform measure, Education Secretary Leonor Briones said Wednesday.
Briones, former national treasurer, cautioned that borrowing was “not the most pleasant experience” a country can go through since it would incur debts to fund its programs, adding that taxes remain the “better option.”
The education chief issued the statement after senators appeared lukewarm to the President’s call for the passage of the Tax Reform for Acceleration and Inclusion package 2 during his State of the Nation Address (SONA).
“The adverse effect is obvious. The government will have to borrow and interest rates will be higher,” Briones said during a Palace press briefing when asked about the repercussion of the TRAIN 2 is not passed by Congress.
“If Congress will approve, and normally it will approve the proposed budget of the President, and the source of the funding will not be made available, then the recourse is to borrow,” she added.
The President earlier asked Congress to pass TRAIN 2, which calls for lower corporate income taxes while rationalizing fiscal incentives. Duterte, in his SONA last Monday, said he hopes to sign TRAIN 2 before the end of the year.
Briones has defended the government tax reform measures, saying revenues are needed to bankroll its programs, such as education and health services for the people.
“It’s either taxes or borrowing. It’s either taxes or no schools, hospitals, bridges, offices, and relief for our poor,” she said.
Briones also admitted the government’s programs for next year have already been laid out, adding that borrowing will be the last resort if revenues are not generated enough.
“When a Finance minister goes off to Washington for the World Bank-IMF meeting and then goes to Paris for the Paris Club meeting, it’s not the happiest, most inspiring of experiences that a country can go through especially with a country like the Philippines which had a very unhappy experience during the global debt crisis,” she said.
“The impact is the law of supply of demand. Interest rates will be higher… that’s why I believe taxes is the better option but we have to watch where the taxes go, and we have to watch who are going to pay those taxes,” she added.