New taxes to pay for Duterte indulgences, not for COVID response—IBON

May 26, 2022

by IBON Foundation

The finance department’s proposed new taxes for the new administration are for paying off the Duterte government’s relentless borrowing for its infrastructure and debt servicing fetish, not much-needed COVID-19 response, research group IBON said. The proposed tax measures will be mainly borne by poor and ordinary Filipinos still recovering from the government’s excessive lockdowns and stingy subsidies, said the group.

The Department of Finance (DOF) recently listed revenue-raising measures for the next administration to supposedly shrink debt and ensure productive spending. These include higher personal income taxes, more goods and services to be covered by the value added tax (VAT), and more taxes on sweet drinks.

IBON said however that these additional taxes are largely consumption-based and will disproportionately burden low-income Filipinos.

The group also belied government claims that public debt bloated because of its COVID-19 response. The government had Php5.5 trillion in gross borrowings in 2020-2021 but the Department of Budget and Management (DBM) reports that total COVID-19 spending over the same period amounted to only Php616 billion, IBON said. The national government’s debt has reached Php12.68 trillion as of end-March 2022.

The group further noted that while the DOF claims borrowing up to US$25.8 billion for COVID-19 response, only a fraction of this is really for COVID-19. Only 23% of this was specifically for COVID-19 programs, 51% was ambiguous, while 26% was not really for COVID-19.

IBON also drew attention to the government’s spending priorities during the pandemic. In 2020-2021 the government spent Php1.9 trillion on mainly transport-related infrastructure projects and Php2.3 trillion on debt servicing in terms of interest and principal payments, noted the group, compared to just Php616 billion for COVID-19 response.

IBON stressed that Philippine debt grew because the Duterte administration insisted on its infrastructure projects and debt servicing even during the pandemic and more urgent social needs. This was after its harsh lockdowns and stingy COVID response made millions jobless and poorer.

While infrastructure is necessary, said IBON, the government needs to assess budget priorities and focus on funding the people’s most immediate needs first. This includes mitigating the health and economic crisis’ impact on millions of households, small businesses, workers, and producers, IBON said. Unfortunately, the Duterte administration’s Build Build Build is among the programs and policies that the newly-proclaimed president Ferdinand Marcos Jr. vowed to continue, said the group.