Arroyo: Next president should impose new taxes

The next government should consider imposing new taxes, President Gloria Macapagal Arroyo said on Friday, claiming that doing so will be crucial in maintaining the economic gains achieved during her nine-year presidency. She said sustaining the local economy’s strong start this year would hinge, among other factors, on getting enough revenues to sustain spending on social services and infrastructure. "We have to sustain the economic policies that we have done and build on them. But that will already be the responsibility of the next administration," Mrs. Arroyo told reporters. "New taxes are very important to make sure we have revenues to sustain our economic growth," she added. Mrs. Arroyo’s call came as the government on Thursday reported a higher-than-expected 7.3% growth for the first quarter, a result Malacanang was quick to claim as due to the outgoing administration’s policies. It also follows an economic manager’s warning that the budget shortfall could hit a fresh high next year and her apparent successor’s continued rejection of new tax proposals. Finance Secretary Margarito B. Teves earlier this week said the deficit could expand to 4.4% of GDP, or roughly P379-386 billion, in 2011 if current tax administration and enforcement measures do not produce enough revenues. The warning came as he announced that Mrs. Arroyo would be approving tariff cuts that would cost some P4 billion in foregone revenues annually. Presidential front-runner Sen. Benigno Simeon "Noynoy" C. Aquino III has insisted he would stick to a campaign promise of no new taxes, specifically rejecting a proposal by Mr. Teves that the value-added tax be raised to 15% from 12%. Albay Governor Jose Ma. Clemente "Joey" S. Salceda, a former Arroyo ally who switched sides to campaign for Mr. Aquino, said raising new taxes was "plan C" for Mr. Aquino as there was enough scope to sustain economic growth without having to incur a huge deficit. "The way things are going for him, improved governance could unleash a lot of capital. There’s enough room to improve collection efficiency because he’s in a position to implement revenue administration," Mr. Salceda said in a telephone interview on Friday. "There is a window for growth while holding deficit at downward trajectory without raising taxes. Expenditure reforms could unlock more bang from the bucks through skillful targeting, item realignments and value engineering," he claimed. The deficit hit a record P298.5 billion last year and the government want to lower this to P293 billion this year. Despite a surplus in April, the P521.9-billion total for the first four months of the year was over the P505.2 billion programmed for the period. - BusinessWorld