BSP's Diokno considers looking into additional tax proposals

Outgoing Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno will look into proposals to implement additional taxes, saying he will first focus on debt sustainability once he steps in as Finance Secretary in the Bongbong Marcos administration.

Diokno said Thursday he will look into the proposals of the Department of Finance (DOF) for additional revenue-generating measures such as imposing additional taxes.

“We will certainly look at the fiscal consolidation plan that was handed over by the outgoing administration,” he told reporters in a virtual briefing.

“To me the focus should really be on tax administration and we need a lot of money to number one, continue our growth momentum, and two, to service our higher level of public debt,” he said.

Diokno was referring to the fiscal consolidation plan proposed by the DOF, noting that the incoming administrations will have to raise P249 billion additional annual revenues in the next 10 years to pay the historic P3.2 trillion additional debt incurred due to the COVID-19 pandemic.

The national government’s debt climbed to record-high P12.68 trillion as of end-March, given the continuing borrowing efforts to boost the war chest against the COVID-19 pandemic.

“Maybe the first item in the agenda will be the sustainability of public debt. My position in the moment is that while our debt-to-GDP ratio is slightly above the 60% limit, I don’t think that is really cause for concern because as long we as continue to grow at around 6% to 7% on a sustainable basis, we can easily outgrow our debt,” Diokno said.

“That said, it is also important that I should look at the sustainability of the debt. This is of course to assure everybody — the domestic audience and our international credit watchers — that we are serious about consolidating our fiscal resources so that we are able to reduce our debt-to-GDP ratio over time,” he explained.

President-elect Ferdinand “Bongbong” Marcos Jr. earlier on Thursday announced that Diokno would take over as Finance Secretary under his administration.

Diokno on Thursday said he intends to retain most of the undersecretaries and National Treasurer Rosalia “Lea” De Leon.

“I think the post of Finance Secretary is equally challenging as being governor of the central bank. Actually we are shooting for the same objective for the country which is to make the Philippines an upper middle economy soon,” he said.

“I think we are almost there, but because of the pandemic, the goal was disrupted so we’re equally focused on that,” Diokno added.

Socioeconomic Planning Secretary Karl Kendrick Chua last week said the Philippines is likely to graduate into upper middle income status by next year, behind the initial target of 2019.

The World Bank defines an upper middle-income economy as a country which has gross national income (GNI) per capita of between $3,956 and $12,235. —LBG, GMA News