Government measures aimed at reducing poverty like tax and fiscal incentives are not helping the country’s poor, a former Finance secretary said.
“Tax and fiscal incentives give very little benefits accrued to the intended sector,” Jose Isidro Camacho, vice chairman Asia and the Pacific of Credit Suisse told businessmen gathered at the Management Association of the Philippines (MAP) International CEO conference held at the Makati Shangri-La yesterday.
“I am, therefore, generally not very supportive of the use of fiscal or tax incentives to promote solutions to these social challenges,” he added.
According to Camacho, who served as Finance secretary some years back, it is best if the government can use the budget and resources intended for incentives and allocate it for direct intervention.
“Fiscal and tax incentives designed to benefit the particular interests or promote certain activities often get diluted in the system among intermediaries and very little end up benefiting the target sectors,” he said.
For example, he said the government can give direct equity to first time home buyers. Camacho stressed that incentives do little to help the poor because for the most part, the benefits do not reach the marginalized.
Camacho said there are other means of addressing poverty like sound economic management, pragmatic legislation, progressive regulations, effective enforcement, efficient bureaucracy and other conservation programs.
“Poverty is the most important challenge for the Philippines and many of the emerging economies and it is the same poverty that in many cases puts a strain on our environment,” Camacho told the businessmen present during the first day of the two-day event.
He said the government must play a pivotal role in poverty reduction given that it is the biggest enterprise and employer. Unfortunately, Camacho said the government is not the most efficient.
“Government policies and actions that promote the economy, create jobs and reduce the overall level of poverty, therefore, can go along way,” he explained.