October 3rd, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) calls fiscal prudence “an existential imperative” after the announcement of a new tax cut plan by the British government pulled the pound sterling to a 40-year low against the US Dollar. Salceda made the statement amid the Philippine peso hitting all-time lows against the dollar.
“Fiscal prudence is a matter of national strength. Although there are global financial cycles that you can’t fight, like the currently almighty dollar, there are things you can do, like keeping fiscal responsibility. That means, for the foreseeable future, the House Committee on Ways and Means will not do any tax cuts we can’t afford.”
“And as for spending, as much as possible, the policy should be pay-as-you-go. Of course, we want more public investments in health, education, and infrastructure. So, the focus of the Committee remains tax reform towards higher revenues and better collection,” Salceda added.
The British pound has slid against the US dollar after Britain’s new government outlined plans to cut taxes. This week, the pound fell by as much as five percent against the dollar at one point touching $1.0327, its weakest at least since the introduction of decimalisation in the early 1970s.
Salceda called the event “a cautionary tale.”
“We need not commit the mistakes of others to learn from them. Clearly, confidence in a country’s fiscal strength still matters. To that end, the President and the Congressional leadership can rest assured that the Committee will pursue more reforms to boost revenues, will work with collection agencies to make administration more efficient, and will decline to pass any big tax cuts for now.”
While Salceda believes that the Peso will continue to slide, “we will make sure that none of it is because of a deficit of confidence in the country.”
“We can’t fight the dollar’s strength because we are a peripheral economy. But we will fight the flowing out of foreign capital in the Philippines by reassuring them of our fiscal strength and economic fundamentals.”
“The committee on ways and means will thus ensure that we exceed our collection targets for this year, we narrow the deficit, we finish at least one tax reform law, we craft at least one new revenue-positive revenue regulation (probably on POGOs), and we complete at least one privatization measure with the DOF. That will be the score card I ask you to measure me against this year.”
“So, no big new tax cuts. What we will do is shore up tax and non-tax revenues to expand spending on high-return projects. I have already assured that House leadership that we will realize at least P180 billion in new revenues not in the Budget of Expenditures and Sources of Funding for 2023. That will create more growth that, in turn, will make our debt smaller relative to the size of the overall economy.”