Medalla urges Noynoy to eradicate fuel smuggling

MANILA, Philippines - A former top economic planner is urging the incoming Aquino administration to eradicate the smuggling of imported fuel which is costing government between P20 billion to P30 billion in lost revenues.

At the same time, former National Economic and Development Authority (NEDA) director general Felipe M. Medalla said the next administration should immediately address the revenue shortfalls of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

The government posted an average annual compounded revenue growth of only 2.6 percent between 1998 to 2008, coming off several double-digit rates in the early 1990s.

“The so-called low hanging fruits or tasks that can be addressed, and solved, by the new administration within its first 100 days are power and revenue-related,” Medalla said during the annual general membership meeting of the Chamber of Thrift Banks (CTB) yesterday.

The BIR recorded an annual compounded growth rate of just 2.3 percent and the BOC slightly better at 3.3 percent.

Over the long term, Medalla said the Aquino administration must also address the forecast debt burden worth up to P10 billion that the Power Sector Assets and Liabilities Management Corp. (PSALM) will incur after it privatizes the government’s power assets.

PSALM was mandated to take over and sell all power assets of the National Power Corp. (Napocor) and other contracts of independent power producers (IPP).

Over the medium term, Medalla strongly recommends an increase in the so-called sin taxes or tax slapped on cigarettes and liquor as well as a reduction in the tax incentives offered by the Board of Investments (BOI).

“The less popular recommendations are retention or increase in the value-added tax (VAT), fixed and real estate tax, and a reduction in the income tax for wage and salary earner, which accounts for 95 percent of income tax collection,” he added.

Other recommendations include reverting the National Food Authority (NFA) to its original stocking and warehousing functions. “Let a wider private sector group take over the functions of buying and selling grains and rice,” Medalla said.