‘Budget constraints to limit additional subsidies’

Louise Maureen Simeon - The Philippine Star

MANILA, Philippines — The fiscal constraints of the new government may affect moves to provide subsidies to various sectors as the administration sticks to its reform bills.

Finance Undersecretary Zeno Ronald Abenoja said the Department of Finance (DOF) is  formulating its position papers on the newly filed bills that seek subsidies for different groups.

A few weeks ago, several lawmakers filed separate bills seeking assistance to different sectors of society, including for single parents acting as breadwinners, stay-at-home mothers, as well as rent assistance for informal settlers.

While additional subsidies would help, providing such would mean more spending for the government at a time when fiscal space is limite:d.

Abenoja pointed out that the guiding principle is that any subsidy or incentive to be given to particular sectors should have an identified revenue source.

“That is very important. We should be able to identify revenue sources for such activity, incentives, and support programs. This is being shared consistently across these different proposals,” Abenoja said.

Nonetheless, the DOF recognizes the merit of such proposals.

“But then again, we have to look at the entire prioritization of the budget given that we have some constraints on the resources,” Abenoja said.

It should be noted that the government is not just dealing with the ongoing COVID crisis, but more so its lingering impact on ballooning debt, swelling fiscal deficit, persistently high joblessness, and elevated inflation, on top of global tensions and market volatility.

To provide more subsidies, the government would have to ramp up its revenue generation, but given its cold stance toward hard-hitting taxes, economists already said the administration may have a hard time.

Abenoja emphasized that the focus right now is to maximize the revenue benefit that could be gained from the recent reforms pushed by the previous administration.

“They are fairly recent, a few years old. We are looking at the improvement in the implementation, as well as the realization of the gains coming from the increase in statutory rates for some of these new taxes that will provide us the revenue bump off or increase in revenue efforts,” he said.

“That will continue to be the priority and the focus moving forward,” he said.

Abenoja acknowledged that the legislative measures being pushed by the new government are enough, for now at least.

“That is the assessment right now, we will see later. We can review the actual performance, but right now the focus is that given the economy is still recovering and we need to be careful,” he said.

Earlier this week, the DOF presented its legislative agenda to the Senate and the House of Representatives.

The DOF is pushing for the Real Property Valuation and Assessment Reform Bill and the Passive Income and Financial Intermediary Taxation, which are the pending tax reform package of the Duterte administration.

Also included are the tax on digital transactions, on single use plastic bags, and the rationalization of the mining fiscal regime.

The DOF is also pushing for the passage of the Military and Uniformed Personnel Pension Reform bill, Capital Market Development bill, Livestock Development and Competitiveness bill, and amendments to the charters of the Land Bank of the Philippines and the Philippine Crop Insurance Corp, among others.


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