* My column in BusinessWorld, March 24, 2020.
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During global health pandemics aided by hysteria, there
is global economic slowdown, deep slowdown bordering on contraction (“negative
growth”). Millions of jobs are lost as companies and shops either scale down
operations or shut down. Some governments around the world adjusted to help the
ailing and dying businesses and job creators via various forms of tax cut (see
Table 1).
Aside from tax and fees cut, there are various regulatory
forbearance made. Examples are:
Canada: Extend tax filing from April 30 to June 1, and
income tax payment until Aug. 31.
Germany: Easier for companies to claim subsidies to
support workers on reduced working hours.
Spain: SMEs and self-employed persons defer tax
obligations (VAT, CIT, PIT) for six months without interest.
Taiwan: Delay payment of taxes for one year or pay their
taxes in installments over 36 months or three years.
The Philippines: Delay payment of income tax from April
15 to May 15.
The Philippine government should consider any of the tax
cuts above, or one tax cut — in VAT or CIT or PIT — even for 1-2 months after
the first full month of recovery. Business losses are everywhere, job losses
possibly in millions, they need a respite.
Recently big business groups and federations and some
professional organizations in the Philippines issued a joint statement urging
the government for big expenditure push of P281 billion on top of the P4.1
trillion approved budget this year.
It is a weird call, businesses and professionals calling
for more spending, more borrowings, which will require more taxes, instead of
calling for tax cut. As businesses are shut down, many government agencies also
shut down.
The President can order mandatory cut and savings in all
executive offices for certain expenditures especially the maintenance and other
operating expenses (MOOE) which includes office rentals and supplies,
electricity, many meetings, travels domestic and international, conferences,
intelligence funds, etc. The forced savings can be used for whatever fiscal
stimulus is decided on, without need for additional spending, borrowings, and
higher taxes. Higher public debt should also be avoided because our interest
payment alone is approaching half trillion pesos already, principal amortization
not included yet (see Table 2).
The Office of the President (OP) has huge MOOE, P5.18
billion and P6.70 billion in 2019 and 2020, respectively.
A sensitive and responsible government would cut spending
and taxes this time and allow the businesses and people to recover from at
least two months of economic dislocation and revenue losses. An insensitive and
irresponsible government would do otherwise.
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