Salceda: Philippines needs P326 billion annually for 20 years to pay for debt

The incoming administration needs around P326 billion in new revenues to cover for its current debts, according to House ways and means committee chairperson Joey Salceda on Monday.

Salceda said the amount must be generated every year to cover for both principal and interest payments of the debts incurred by the Duterte administration amid the COVID-19 pandemic.

“Unless we can raise that kind of revenue, we will have to downscale our public spending or borrow again to pay the debt,” he said in a press release.

“If you annuitize the debt service due to deficit spending from January 2020 to March 2022, you will have around P144 billion in principal payments over the next twenty years, and around P181 billion in interest payments. That will of course vary per year, and some years will need lower debt than others. But if you want to stretch out the payment schedule, that’s the kind of fiscal space you need to cover the COVID-19 debts without incurring budget cuts,” he added.

The Bicolano lawmaker said “budget cuts aren’t a very good option if you want to sustain COVID-19 growth, and of course, borrowing more to cover past borrowings is a downward spiral to fiscal hell.”

He said the Philippine government should show creditors that the country is in good fiscal standing, adding that a tax policy reform is the best option.

Salceda said the incoming president could utilize his “supermajority in both mandate and Congressional alliances” in order to enact “smart, efficient tax and economic policies to address this debt overhang.”

“The earlier the Marcos administration starts with a fiscal expansion program, the better it will be for investor confidence, our credit ratings, our debt overhang, and our future growth prospects,” he said.

Salceda also said he would ask the new administration to make reforms in the Bureau of Internal Revenue (BIR).

“I would ask the new President to establish three new internal reforms: The creation of a digital taxation service, the creation of a transfer pricing service, and ease of paying taxes reforms in the BIR processes,” he said.

“I would particularly want to see VAT refund processes shortened, TIN registration fully digitalized, and the electronic invoicing mandate under the TRAIN law fully implemented,” Salceda added.—LDF, GMA News