Philippines’s missed fiscal targets not surprising — Ibon
MANILA –The Philippines already has the lowest tariffs in Asia, and this endangers government’s revenue program and its goal of achieving a balanced budget by next year, according to independent think-tank IBON Foundation.
According to IBON research head Sonny Africa, due to government’s severe tariff reduction program, the average weighted tariff in the country has already fallen to 3.6% from a peak of 32% in 1993. Revenues continued to go down when government started reducing tariffs in 1995, contributing to the constant budget deficits.
Hence, despite declared revenues from the expanded value-added tax (EVAT) and privatization, the country’s revenue position can only continue to deteriorate, Africa said.
As a result of government’s tariff reductions, import duties as a share of total government revenues have fallen from 36% in 1993 to 19% last year. Further, import duties as a share of gross domestic product fell from a high of 5.6% in 1993 to just 3% in 2006.
“The Arroyo administration’s continued adherence to import liberalization and economic globalization puts the country’s fiscal position in peril and threatens further financial instability,” Africa said.
The country’s fiscal situation will be discussed at the IBON Midyear Birdtalk, a semi-annual forum on the economic and political situation and trends. A media briefing of the Birdtalk is scheduled tomorrow, July 11 at 10 a.m. at the IBON Center, 114 Timog Ave., QC.
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