Business community: Fight corruption, boost revenue by making evaders and smugglers pay

WHILE his promise to speed up government service by cutting red tape and slowing down wang wang wielding officials have gained brownie points from the public, the business community has reminded President Benigno Aquino 3rd to make true his words of not imposing new taxes in the drive to improve revenue collections.

Jesus Arranza, Federation of Philippine Industries chairman, told The Manila Times that the Aquino administration should look into reported corrupt practices in government’s main revenue collecting agencies in his first 100 days.

“His first agenda, President Aquino said, is to conduct an audit of government agencies. Considering this and that he does not want new taxes, he should attend to the concerns on the [Bureaus of Customs and of Internal Revenue],” Arranza said.

The government is estimated to be losing P125 billion in uncollected taxes annually from the two agencies because of mis- and under-declaration of goods by importers and smugglers.

The tax collection deficiency remains a concern to business groups for it means government would not be able to pour adequate capital into infrastructure and social service projects. At the same time, it opens the door to the possible imposition of additional taxes to allow the administration to fund its spending program.

“He should address the shrinking of the tax base and collections. That is a deterrent to investors,” Arranza said.

Because of the rampant corruption activities in the country, Transparency International earlier placed the Philippines 139th out of 180 countries in its corruption perception index. The Philippines ranks lowest in Southeast Asia.

The P125-billion loss from its revenue collecting efforts could easily cover the P40 billion needed to solve the backlog of over 60,000 classrooms in the country for 2010 and additional ones needed over the succeeding years. It could also be used to put up over 110 kilometers of expressways every year.

Tax collection improvement imperative
Dr. Vic Abola, an economist at the University of Asia and the Pacific, said in a phone interview that improving tax collections should be No. 1 in the Aquino administration’s list of priorities in its first days in office.

“The President should adjust taxes that are not performing well like the sin and corporate income taxes.
Although these are politically sensitive, he should take advantage of his popularity while it is still high,” he said.

Aside from this, the Aquino administration was also advised to stimulate the private sector by lowering interest rates and supporting the peso to create more jobs.

Although the government’s monetary policy would take a hit from such a move that could lead to an increase in the prices of basic goods and services, Abola said that the country needed more jobs and therefore stimulating the economy is paramount.

It is estimated that one out of five Filipinos in the Philippine labor force works abroad because of the lack of job opportunities in the country.

But to support job generation and any improvement in the local economy, the government would also have to focus on the woes besetting the power sector.

Luzon will have regular power shortages
Alan Ortiz, former president and chief executive officer of National Transmission Corp., said at a recent forum organized by the Philippine Economic Society that the government needs to attract investments in the power generation sector and improve existing transmission lines in the short-term to avert an already worsening power shortage.

“In a few months we will be experiencing brownouts in Luzon,” he warned.

Government projections indicate that the country’s available power generating capacity would not be enough to cover demand. Commitments to build new plants in the next three years are ever so few.

As a result, Luzon is expected to face the regular power supply deficiencies now being experienced in the Visayas and Mindanao. This, he said, would force companies and workers to seek greener pastures abroad.

In the long term, Ortiz said that the Aquino administration would also have to open itself up to the idea of putting up a nuclear power plant to secure the country’s power requirements.

The country’s lone nuclear facility, the Bataan Nuclear Power Plant, was mothballed by the previous Aquino administration. –EUAN PAULO C. AÑONUEVO REPORTER, Manila Times