Research group Ibon Foundation Thursday urged the next administration to resist pressure for new tax schemes that will purportedly deal with the national government deficit.

According to Ibon research head Sonny Africa, it will be a challenge for the new administration to put forward pro-people initiatives to address the fiscal crisis.

Africa noted that if current revenue and spending trends continue, Ibon initially estimates a deficit from P309 to P374 billion in 2010.

He added that presidential frontrunner Senator Benigno “Noynoy” Aquino III has yet to take a strong progressive position on the country’s fiscal problems.

“The International Monetary Fund (IMF), finance officials, creditors and private sector economists including the academe have been vocal about new and higher taxes to deal with the national government deficit,” Africa said.

New tax schemes include raising the value-added tax (VAT) from 12 to 15 percent, and so-called sin taxes on cigarettes and alcohol.

“Senator Aquino’s recent statement that he will improve tax administration and collection efficiency is welcome, but even in the best circumstances this will take time to materialize,” Africa said.

“His declared openness to raise taxes however is cause for concern given the past administrations’ bias on relying on relatively easy to collect but regressive consumption taxes over basic fiscal reforms. He has also conspicuously avoided articulating a stand on burdensome debt payments,”
he said.

Ibon said the rise in the deficit to P298.5 billion or 3.9 percent of gross domestic product (GDP) in 2009 from P68.1 billion (0.9 percent of GDP) in 2009 was the steepest the country has ever seen and indicates the severity of the problem in 2010.

“If current revenue and spending trends continue, Ibon initially estimates a deficit in 2010 of P309 billion to as much as P374 billion. The low estimate assumes revenue effort recovering to the average over the long 2000-2009 period and the high estimate of no improvement from 2009,” Africa said.

“The strategy that an Aquino administration chooses to deal with the accelerating fiscal crisis will signal how ‘reformist’ it is going to be,” he also said.

Ibon cited that the record fiscal deficit under the Arroyo administration in 2002 ushered in a long period of declining spending on social services amid soaring debt payments and the implementation of the repressive RVAT in November 2005.