Economists file wish list for next Congress

MANILA, Philippines – A wish list of priority economic reforms was handed over to Congress’ administrative units yesterday in a bid to lay down an agenda for incoming legislators.

Measures to address the fiscal deficit topped the 4-pronged proposal of the University of the Philippines Open University (UPOU), which consolidated input from the business sector, academe and state agencies.

The submission joins a pile of others—which similarly urge action on inadequate state funds—waiting for those elected into office during the May 10 polls.

“For a sustainable economic growth and inclusive development, the next administration should address … structural weaknesses in the tax system, increased pressure on the deficit and continuing threats to growth,” states a copy of the proposed legislative agenda which was turned over to representatives of the House Committee Affairs Department and the Senate Economic Planning Office in a ceremony.

The two agencies provide administrative and technical support to Congress, including briefing legislators on bills to pass.

The incoming 15th Congress, the proposal states, needs to act on “revenue-enhancing bills” that will rationalize fiscal incentives granted to firms, simplify the income tax system, restructure levies on “sin” products and amend the Internal Revenue Allotment law to make local governments more accountable.

It also calls for a moratorium on the passage of tax-eroding measures, which range from the creation of several economic zones, the lowering of royalty fees collected from firms that extract geothermal energy, and the exemption of hybrid vehicles from taxes.

Some P49.5 billion in tax revenues may be lost because of these measures, UPOU Vice-Chancellor Maria Fe V. Mendoza said at the turnover, echoing claims made by the Finance department.

The legislative agenda complements UP economists’ calls on Wednesday for a higher value-added tax rate and the rationalization of corporate tax perks. These will support government targets of limiting the 2010 budget shortfall to P293 billion or 3.5% of gross domestic product, the economists said.

The UPOU proposal went on to recommend speedy passage of bills for three other areas: infrastructure development, governance and business regulation.

Under the infrastructure thrust, the proposal cited five priority reforms:

– increased allocation for infrastructure spending
– amendments to the build-operate-transfer (BOT) law’s implementing rules to encourage private sector participation
– amendments to the Electric Power Industry Reform Act to resolve “ambiguous provisions” and thus attract needed investments
– higher road usage fees to lure infrastructure developers with assured returns on investments
– the creation of the Department of Information and Communications Technology

Measures to improve two other areas—governance and business regulation—include the Freedom of Access to Information Act and the Anti-Trust Act, among others.

The proposal will be “taken to another level” and plans for another phase of the advocacy program are being worked out to “woo legislators” once they are elected, UPOU Chancellor Grace Javier Alfonso said.

“After this, we now have contacts to see who we can work with,” British Ambassador Stephen Lillie told reporters.

The British Embassy was the donor behind the drafting of the proposal.  –Jessica Anne D. Hermosa, BusinessWorld