The Philippines may cut taxes as the incoming government improves collection and narrows the budget deficit, said Benigno Aquino, who won the nation’s May 10 presidential election according to unofficial tallies.

Aquino, 50, is sticking to a campaign pledge to refrain from raising taxes or imposing new levies, he said in a statement released by his media office.

“By utilizing the taxes already there, collecting them more efficiently, we will be able to manage the fiscal situation properly and responsibly,” Aquino said.

Aquino vowed to track down tax evaders and smugglers to boost revenue and rein in a budget gap that widened to a record 298.5 billion pesos ($6.5 billion) last year, equivalent to 3.9 percent of gross domestic product. Without new taxes, the shortfall may widen to 4.4 percent of GDP in 2011, Finance Secretary Gary Teves said on May 25.

Aquino blamed President Gloria Arroyo for fiscal irresponsibility, citing continued heavy spending, new tariff cuts and reports of smuggling. Arroyo approved scrapping an import tax on petroleum and other products, which would reduce annual state revenue by as much as 4 billion pesos, Teves said.

“We keep getting reports of continued smuggling,” Aquino said in the statement. “Hopefully at some point, we can even advocate a lowering of taxes to put more resources in the private sector.” The Philippines’ 7.3 percent GDP growth in the first quarter, the fastest pace in almost three years, reflects “very large election spending,” he said. Aquino described the increase as a “flash in the pan.”

The government estimates the 2010 deficit at P293.2 billion, equivalent to 3.6 percent of GDP. (Bloomberg)