Incoming Finance Secretary Benjamin E. Diokno would seek for consensus among lawmakers and members of the executive department before pursuing the Marcos administration’s own fiscal consolidation plan.
New and higher taxes are not off the table, Diokno said in an interview with Manila Bulletin, saying outgoing Finance Secretary Carlos G. Dominguez III’s recommendations under the Fiscal Consolidation and Resource Mobilization Plan will be “considered.”
“I’m not saying I’m not in favor,” Diokno clarified, referring to the Department of Finance’s (DOF) newly unveiled fiscal consolidation plan. “We will look at it, if there’s an assurance from both houses of Congress that they can pass it within year one, then we will push for it.”
“We have to have consensus in the executive department on what do to, but definitely we need a fiscal consolidation plan because right now our deficit-to-GDP [gross domestic product] ratio is around seven percent,” he added.
But the new administration would not quickly push forward a fiscal consolidation program that does not have the support of Congress.
“We will consider all the proposals and we will ask the Senate President and the House Speaker if they can do it, because I don’t want it to linger for many years,” the incoming DOF chief said.
But what is certain, Diokno said is that the incoming economic team of President-elect Ferdinand R. Marcos Jr. will pursue the pending two measures of the comprehensive tax reform program (CTRP) of the Duterte administration.
Diokno is referring to the Real Property Valuation and Assessment Reform Act and Passive Income and Financial Intermediary Taxation Act, which are both pending in Congress.
Since 2016, the Duterte administration embarked on its CTRP, which includes Tax Reform for Acceleration and Inclusion (TRAIN) and Corporate Recovery and Tax Incentives for Enterprises (CREATE) laws, among others.
“Right now, I believe that our tax system is really superior to what we inherited. We’ve done so much reforms with Sonny [Dominguez]. So, what I can handle now is the tax administration. How can you improve collections,” Diokno said.
“We can further work on our digitalization reforms. We want to focus first on the use of technology for now,” he added.
As Diokno is set to take the helm of the DOF, he said “I would like to be the economic leader, just like the role of Sonny.”
“Economic growth is very important because once it is sustained, it will solve our revenue problem. An economy that is growing would yield a lot of taxes.” Diokno said.
Last Friday, Diokno said he was not worried about the government’s ballooning debt load, noting that the economy can “easily” bring it down once the country’s GDP grows by at least six percent to seven percent.
With his more 30-year experience, Diokno said he has seen all the crises that struct the Philippines, including its debt level of close to 100 percent of GDP.
“Where a better place right now, and in fact, this administration that the Duterte administration is going to leave to the next, the incoming administration, is in a much better tax structure than before and it raises more taxes,” he said.
For this reason, Diokno believes “I think we should stop first looking at the tax reform. What I’m saying is we are dealing with a present tax structure’s implementation.”