NEDA: Additional taxes, growing the economy can help fund gov't priorities if budget not enough

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Metro Manila (CNN Philippines, June 27) — The administration of President-elect Ferdinand “Bongbong” Marcos Jr. must put importance on spending on government priorities within the prescribed budget cap, but it could still take certain steps to generate additional funding should this fall short, according to the National Economic and Development Authority (NEDA).

“We have to live in a time where there are more risks and uncertainties so the most important is to prioritize within our budget. And if it is not enough, then we pursue the fiscal consolidation plan as proposed by the government to increase revenues from potential new taxes,” said NEDA chief Karl Chua on Monday in his last briefing as the agency’s head.

“And we also grow the economy so that we can increase the income of the people which of course translates to additional taxes, which we can use to fund more priorities,” Chua further said.

The Development Budget Coordination Committee (DBCC), of which Chua is part, earlier assigned a ₱5.268-trillion ceiling for the 2023 national budget. The Department of Budget and Management (DBM) said the Marcos government must adhere to this level if it wants to keep the country’s finances in check. 

DBM Secretary-designate Amenah Pangandaman, however, said she and her fellow incoming economic managers must revisit such assumptions. She said these must be anchored on the major goals of the Marcos government: lower the deficit to 3% of gross domestic product, achieve upper middle-income country status, and trim poverty incidence to single digits. 

Meanwhile, Benjamin Diokno, the outgoing Bangko Sentral ng Pilipinas governor and incoming secretary of the Department of Finance (DOF), has expressed preference for improving tax collection and ensuring that growth outpaces the country's debt over the proposed fiscal consolidation plan of the DOF which introduces additional taxes. 

The economy grew 8.3% from January to March, beating market forecasts. It follows the 7.8% expansion in the last quarter of 2021, which brought full-year growth to 5.7%.

However, the country's debt stock has ballooned to 63.5% of gross domestic product in the first quarter of 2022 — rising further from 60.4% in end-2021.

Marcos will formally assume the presidency on June 30.