A bitter pill to swallow
The Department of Finance (DOF) headed by the outgoing Finance Secretary Carlos Dominguez recently gave an unsolicited advice to the incoming Marcos administration on how to repair the Philippine economy that was badly damaged by the COVID-19 pandemic and other calamities. The advice serves as a balm prescribed to heal an ailing economy that will be turned over by the Duterte administration.
While our present problems such as the new historic high P13.1 trillion debt resulting from massive borrowings to finance the government’s pandemic response may not be the result of negligence of the outgoing administration, it is certain that the burden will have to be shouldered by every Filipino in the form of taxes to be paid by the present and future generations.
To prevent having to use borrowings to pay P3.2 trillion in incremental debt, we need to raise at least P249 billion every year in incremental revenues. Borrowing money to pay for an existing debt is not a solution to our financial woes. It is just inflating a balloon until it explodes.
Another proposal is to sell government assets such as disposing the vast tract of land occupied by the NAIA to generate funds to pay for our debts. This may sound desperate but practical given the current challenges of operating the airport at the metropolis. But this is easier said than done and may involve careful planning and execution.
If the above solutions are temporary ones and may not solve our problem in the long run, then we need to brace ourselves and prepare to swallow a bitter pill. The third and so far, the most burdensome to the Filipino people is to pay new and higher taxes.Technocrats may argue that there is nothing to worry since the apportionment of the tax burden among the taxpayers will be based on the ability to pay. In this case, those who are earning less continue to enjoy a tax exemption.
True, in so far as direct taxes are concerned, which happens only when a person earns a taxable income or receives a taxable property by way of donation or inheritance. The impact of indirect taxes, however, is something that will be felt by every Filipino every day. An additional tax of P100 pesos may just be a pittance for the privileged few. But to the ordinary people, this means less food to eat and a very tight budget for other basic needs.
Given all these challenges, the Marcos administration wielding the baton as parens patriae must ensure that the vulnerable sectors are adequately protected and supported, and not just left to suffer in the dungeon of extreme poverty and deprivation.