The Marcos administration has no plan to reduce government spending to temper the nation’s ballooning debt load, the incoming chief of the Department of Finance (DOF) said on Monday, June 6.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, who is President-elect Ferdinand R. Marcos Jr.’s pick for the finance post, said the next administration is sticking to plan of reducing the government’s budget deficit to three percent by 2028.
But Diokno clarified that taking budget cuts as part of the government’s fiscal consolidation program is an option for the new administration.
He said the Duterte administration’s “Build, Build, Build” program should be sustained, but at the same time the new administration should focus on the government’s efforts in raising enough tax revenues.
Diokno believes the tax reforms initiated by President Duterte in nearly six-years provided the incoming administration enough legroom to generate additional revenues to support the same level of public spending.
“Traditionally, in case of a problem like this, it would prescribe budget cuts. I don't buy that idea. I think we should pursue our ‘Build, Build Build’ program, and because of the pandemic, I think we should continue to invest in human resources,” Diokno said in an interview with ANC.
“There’s should be no cut in our expenditure plan, I think we should really focus on raising enough taxes,” he added.
Under the DOF’s fiscal program, the national government should reduce its budget deficit ratio from 7.6 percent for 2022 to 6.1 percent next year, then 5.1 percent in 2024, and 4.1 in 2025, the official said.
“Our goal is to bring it back to three percent by the end of the Marcos regime. I think the challenge is still of course, we have to raise their enough revenues,” Diokno said.
With better tax system today, Diokno said he is confident that the new administration will be able to raise enough taxes to ensure that the government will meet its budget deficit ceiling targets.
However, Diokno added that there is room for improvement in tax administration, particularly in the Bureau of the Internal Revenue and Bureau of Customs’ digitalization program.
“There are rooms for better tax collection using technology,” Diokno said. “When you make the tax system very difficult for taxpayers, hat's not good. You got to make it taxpayer friendly. So that's done through electronically,” Diokno said.
“Although I said that there is a better tax system than the previous one, it’s not perfect. It could be improved upon. But to me, the focus should really be first let's implement the new tax system and find out if we have when there's a need for further reform,” he added.
Last week, the Bureau of the Treasury reported that the government’s debt stock continued to rise, reaching at P12.679 trillion as of April 2022, from P10.991-trillion in the same month last year
The end-April debt load is also more than the P12.679-trillion recorded in the previous month.