Aquino admin mulls raising taxes next year

MANILA, Philippines - The Aquino administration will consider raising taxes starting next year, a Finance official said over the weekend.

The first measure the government would be pushing is the increase in sin taxes.

The official said that the government would start considering introducing new tax measures or raising taxes after 18 months into the Aquino administration’s term have lapsed.

 “The promise is no new taxes for 18 months. After that, the government will start considering it,” the Finance official said.

The source said the government is optimistic they can convince lawmakers to support an increase in sin taxes as they have already seen that the Aquino administration is serious in its fight to fix the country’s fiscal position by improving tax efficiency.

At present, 90 percent of the cigarette market in the country is controlled by PMFTC, the merged entity of Philip Morris and Lucio Tan-owned Fortune Tobacco Corp.

The government needs to level the playing field so that other companies can enter the market.

According to government estimates, the sin tax measure could raise as much as P19 to P20 billion in the first year of implementation, P30 to P40 billion in the second year, P40 to P50 billion in the third year and P60 to P70 billion in the fourth year.

The department said that the current tax structure is inequitable because products having the same current net retail price can be taxed differently if one was introduced before January 1997 and other one after 1997.

The government has a target to contain the budget deficit at roughly P300 billion this year or 3.2 percent of gross domestic product (GDP), narrower than the P314.4 billion budget gap incurred in 2010.