New Fiscal Aims for Philippines

July 2, 2010 Taxation in Philippines

55During his first day of Government office the Phillipine’s newly appointed Finance Secretary, Cesar V. Purisima, laid out a new focus for national fiscal policy, concentrating on fighting tax evasion and loopholes, while allowing the Government adequate fiscal freedom to provide public services.

On July 1st Cesar V. Purisima made a public statement revealing his intended direction and focus for the Government’s Finance Department. He explained that a key aspect necessary for an efficient tax system is the removal of tax loopholes and fighting corruption. Only once the tax system reaches a satisfactory level of efficiency, will he consider instating significant tax hikes or new taxes. The Minister described his intentions as “plugging the holes” in the national “tax pail”. Cesar Purisima assured the media that the fight against corruption and tax evasion would be unbiased, paying equal attention to all taxpayers, regardless of position or wealth. He went on to say “…there will be no witch-hunt… we will not discriminate on height, weight, race, color, or gender.”

In regards to Government spending, Cesar Purisima declared that his primary concern was to adequately manage deficits and not put reigns on “balancing the budget”. He revealed his intention to maintain the government deficit at no more than 2 percent of the national GDP. According to the Minister, a meeting will be held on July 2nd between the Finance Ministry, the Department of Budget Management and the National Economic and Development Authority to discuss the nation’s future fiscal policies, including deficit management. Cesar Purisma’s current plans are intended to allow the Government fiscal room with which to provide public services at an efficient level, while allowing for an economic recovery in the medium term.

The new Minister also ordered all Government departments to carry out a review of their current assets and expenditures. He intends for the Finance Ministry to carryout “zero based budgeting”, whereby all Government department records will be scrutinized closely before any expenditures are approved.

In his initial Government address the Minister also revealed his intention for the Justice Department and all tax agencies to increase efforts and monitoring of anti-corruption and anti-smuggling programs. He said that tax agencies will not require a complete overhaul but will need to increase implementation of Government anti-smuggling and anti-corruption initiatives. He expects internal tax agency efficiency results to be apparent within two weeks.

Photo by Michael Tienzo