In view of the recent interest hikes implemented by the BSP, ACG Founding Chairman and Chief Tax Advisor Mon Abrea called for the implementation of fiscal policies that would complement these monetary policies.
“Even with the contractionary monetary policy by the BSP, it is not enough to really temper our inflation,” Abrea said in an interview with CNN Philippines’ Rico Hizon.
One way that fiscal policy can be implemented is by increasing taxes. Abrea proposed the imposition of taxes on non-essential goods, specifically that on luxury cars, alcoholic drinks, and cigarettes. These taxes would not affect the poor and those most vulnerable to inflation.
He also noted that fiscal policy can be done by cutting government spending.
“The government must be more transparent and accountable in dispersing the budget, given that for the last decade, there has been, on average, one trillion of unused and misused funds,” Abrea said.
Abrea emphasized that these policies must be prioritized over the proposed Maharlika Investment Fund.
“If the Maharlika Investment Fund will not have a direct impact or will not address our urgent high inflation issue, then the President should prioritize these possible legislation on increasing taxes or cutting government spending,” he added.
It is not accurate to compare the Maharlika Investment Fund being proposed to the usually cited examples of Norway’s Government Pension Fund or Singapore’s Temasek. Aside from coming from surplus economies, these sovereign wealth funds have also incurred losses before they became profitable.
“The Philippines cannot afford to incur more losses, especially given our P13 trillion debt,” he explained.