Press Release
February 19, 2010

To ease deficit woes
Villar vows to crack whip on revenue agencies

Nacionalista Party (NP) standard-bearer Manny Villar yesterday vowed to crack the whip on the country's revenue collection agencies and empower local governments to address the country's runaway budget deficit.

In a statement, Villar said the government's P298.5-billion deficit - P48.5 billion over the target - threatens to dampen projections of economic growth in the next two years unless adequate measures are put in place.

"The next administration needs to boost the efficiency of the Bureaus of Internal Revenue and Customs. Our commitment is to improve tax administration, simplify taxation for small businesses and the self-employed, and rationalize fiscal incentives," Villar said.

"At the same time, we need to ensure that the revenue-raising powers of local government units are adequate and robust to finance public services. Healthy LGUs will take some of the pressure off the national government," he added.

Villar acknowledged that stimulus spending and reconstruction costs for damages caused by typhoons last year inflated the deficit.

But he explained that a well-planned approach in terms of prudent fiscal administration through improved collection must be put in place if the government is to successfully cut the deficit to manageable levels in the next two years.

"Creating new taxes will always be a last resort in addressing the deficit problem. Our priority will be to improve collection efficiency and be very prudent in our fiscal affairs. We need to perk up the countryside economy by empowering LGUs in revenue generation to allow them to make growth-inducing investments," the NP standard bearer said.

Villar said current tax collection efforts are hampered by a thin tax base and a complex tax structure. "We will zero in on structural defects and move quickly to boost efficiency," he said.

Earlier, Finance Secretary Margarito Teves blamed new laws cutting taxes and the government's failure to sell big-ticket assets for the runaway deficit. Teves also said the next president of the country will have to deal with an additional P41-billion shortfall from tax relief measures to kick in this year.

But Villar said the problem, although daunting, is far from insurmountable as he noted that good governance and strong political will can address the budget deficit crisis.

"As a former businessman and entrepreneur, I understand how big deficits can stunt economic growth. It will take good governance and strong political will to execute measures needed to address the deficit problem. We will need to work closely with Congress and other branches of government," he added.

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