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SPECIAL Philippine Development Forum (PDF) on Wednesday
tackled the problems that still beset the Philippines,
even after some progress in particular areas, such as
attaining fiscal targets, to try to ensure that progress
continues and Millennium Development Goals are met
despite the global crises in oil and food.
Government officials were joined in the
forum by representatives of the Asian Development Bank,
Australia, Austria, Canada, European Commission, France,
Germany, International Monetary Fund, Japan, Korea,
Spain, New Zealand, United States, United Nations and
the World Bank Group.
The World Bank said in a statement that
participants stressed the need for legislative action to
boost government revenues, increase transparency and
accountability, maintain the value-added tax, expand the
conditional cash transfer program, further agriculture
productivity and stay on track in trade reforms.
Among the legislative actions
highlighted were the rationalization of fiscal
incentives and the restructuring of excise taxes, which
the World Bank said are already becoming “increasingly
urgent,” particularly because of the reduction of
corporate tax and the implementation of higher
income-tax exemptions next year.
World Bank country director Bert Hofman,
who cochaired the Special PDF meeting, earlier said that
implementing exemptions and reducing corporate tax will
be unhealthy for the country’s revenue-generation
efforts.
Meanwhile, as participants welcomed the
increased government spending levels and appreciated the
transparency in the additional expenditures that
government planned on social protection and agriculture,
they said there is still need for greater transparency
and accountability.
The World Bank said, “participants noted
that better-targeted government spending and more
transparency could also boost revenue efforts, as
taxpayers are more likely to comply if they see their
money is used well.”
The meeting also discussed a variety of
policy options proposed for protecting the poor from the
impact of higher food and fuel prices. A broad consensus
was reached that across-the-board measures like a VAT
rate reduction, abolition of the VAT on oil or changing
the VAT on oil to a specific tax would not be the
appropriate tool for the goal of supporting the poor,
since most benefits from reducing the VAT would benefit
those with sufficient means.
They were also clear that such measures
could result in lower revenues and undo some of the
Philippines’ gains from past fiscal and economic
reforms.
In terms of the conditional cash
transfers (CCT), participants stressed the need to
expand the program and establish a solid targeting
system.
“The meeting acknowledged that the CCT
has the potential to boost the Millennium Development
Goals as well as directly fight poverty and inequality,
noting that sustained investment in the program could
alleviate future economic shocks to the poor,’ the World
Bank reported.
“The government would need to balance
direct assistance with policies that improve policy
environment for the private sector to invest in
agriculture and engage in agricultural trade, including
furthering trade reforms at the border through a
consultative process with stakeholders,” the bank added.
The PDF also became a venue for debate
on the merits of subsidies for agricultural inputs such
as fertilizers and seeds. Participants noted that these
subsidies could be used as a transition measure to
cushion the near-term impact of policy reforms on poor
farmers.
The bank further reported that
Philippine development partners offered assistance to
implement critical reforms including rationalization of
NFA’s functions, trade policy and irrigation issues.
During the forum, Finance Secretary
Margarito Teves outlined the government’s medium-term
fiscal targets, including achieving a balanced budget by
2010 and improving the tax effort ratio to 14.6 percent
in 2008 and to 14.9 percent by 2010.
Teves also said the government aims to
sustain a manageable consolidated public sector
financial position, and cut the national government debt
to lower than 50 percent of gross domestic product by
the end of 2010.
Budget Secretary Rolando Andaya, on the
other hand, reported that government spending
accelerated in recent months and that a higher rate of
expenditures on priority programs was attained. |
