Government may impose new taxes to pay Napocor liabilities

Budget Secretary Emilia Boncodin admitted the possibility of imposing new taxes to fund part of the P200-billion liabilities of the National Power Corp. (Napocor) to be absorbed by the National Government once the state-owned power firm is privatized.

"We are not closing the possibility (of new taxes) but that would be our last resort," Boncodin said in an interview after an inter-agency press conference on the power bill last Wednesday.

The budget chief said that raising taxes normally takes time. "We have to seek the approval of Congress before we could raise or impose/create new taxes. This will take time," she said.

She noted that the Comprehensive Tax Reform (CTRP), which took several years to be implemented, has yet to be fully enforced.

"Imposing new taxes cannot be done unilaterally just like what happened to the CTRP," she said.

Most importantly, she said, the government should first put priority on going after tax evaders before creating new taxes. "Tax cheaters now will not be tolerated. As you can see, nobody is spared from being investigated from tax fraud," she said, referring to big business tycoons being subjected to tax audit investigation.

Increasing or creating new taxes is one of the possible options being eyed by the government to fund its future obligations such as the P200 billion liabilities of Napocor once the power company is privatized.

She explained that based on their computation, the National Government will start paying off these Napocor debts on 2006.

Other options being considered include: the proceeds from the revenues to be raised from the Malampaya natural gas project and borrowing from foreign sources.

The National Government expects to receive $9 billion in royalties from the Malampaya project over the next 20 years. The government will start to get its share from the project but only after the proponents recover their cost.

President Arroyo had proposed the securitization of the Malampaya proceeds. At present, it was learned that at least two international banks are proposing to underwrite the planned securitization program. – Donnabelle Gatdula