Noy’s lips have slipped
| EDITORIAL |
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06/26/2011
The string of ratings upgrade that the country received the past few days appears to be teasers for Noynoy to persuade him to push forward the breaking of his pledge of no new taxes or tax increases.
Already, Noynoy had stated that taxes will be increased in 2013, saying that the pledge for new taxes was only for a year.
Plagiarizing the elder and the better George H.W. Bush during his 1988 US presidential campaign, Noynoy boasted “Read my lips, no new taxes” during his own campaign in the elections last year to stress his politician’s vow.
After being elected, he was already singing a different tune saying that the new taxes or tax increases pledge was only effective for his first year in office and which means it will effectively expire this month.
His Palace apologists, as standard practice, blamed the past administration for Noynoy’s failure to hold up to his pledge, citing several supposed anomalies in government agencies that drained the public treasury. Until now, however, nothing concrete had come out from such allegations.
Noynoy’s economic officials said his administration is staring at a P298 billion deficit this year after a record P314 billion budget shortfall last year.
His officials are now brimming with confidence that the gap in the budget won’t be as big as P298 billion after reporting surpluses in the first few months of the year but these were achieved by heavily cutting off spendings for basic services.
To raise revenues, Noynoy said during the campaign sorties that his government instead would run after tax cheats and smugglers, which is turning to be another empty promise as smugglers and their agents are lording it over at the Bureau of Customs while the Bureau of Internal Revenue is running after small fry and ordinary individuals to squeeze them dry for taxes.
The Philippines received one-notch upgrades from both Fitch Ratings and Moody’s while Standard and Poors issued conditions for a further improvement in the country’s credit ratings.
As it stands, Fitch rates the Philippines one rung below investment grade while both Moody’s and Standard and Poors have the country at two notches below investment grade.
Getting an investment grade would mean lower credit costs and an improved investors view for the country.
Among the bigger economies in the region, the Philippines is at the tail-end in the credit ratings game. Indonesia’s worst rating among the three agencies is already a notch below investment grade.
The upgrades that the country received had attached caveats about the urgent need to expand the tax base to improve revenue collections which in layman’s language, is simply to tax more Filipinos.
The more likely and fastest way to do this is to raise the value added tax that is 12 percent which is about the right rate for a developing country but which is not raising the right revenues for the Philippines mainly as a result of tax evasion and corruption that exists among the collecting agencies.
The tax should be imposed on nearly all consumer commodities and services but the efficiency rate or actual collections represent only a small fraction of what the government should be collecting.
In effect, targets are regularly missed and the deficit remains gargantuan compared to past administrations.
The upgrades are invitations for Noynoy to advance the government’s tax increases forward and break his pledge earlier than planned.
Reneging on his campaign vow would be easier now for Noynoy since he is not keeping his promise anyway, saying that new taxes would have to be imposed in 2013.
With the ratings firm baiting a new upgrade, the likelihood is that the date would be moved forward to next year.
The question among many is whether Noynoy can hold up to the pressure.
Read his lips, Noynoy is speaking in a forked tongue.
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