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MANILA - Aiming to address the country's infrastructure bottleneck is good, Mr. President. But the question is, how will the government fund it?
If there is anything the 3rd State-of-the-Nation Address was less explicit about, then it was in the area of increasing tax collections, according to economists.
On Monday, President Benigno Aquino III promised to build sufficient infrastructure before the end of his term in 2016.
He cited projects such as the construction of the New Bohol Airport in Panglao, New Legaspi Airport in Daraga, and Laguindingan Airport in Misamis Oriental and the upgrade of the international airports in Mactan, Cebu; Tacloban; and Puerto Princesa.
Aquino also wants to rehabilitate airports in Butuan, Cotabato, Dipolog, Pagadian, Tawi-Tawi, Southern Leyte, and San Vicente in Palawan.
In addition, the government plans to pursue the LRT Line 1 Cavite Extension Project, the connection of North Luzon Expressway and South Luzon Expressway, and the common provincial bus terminals in Taguig, Quezon City, and Parañaque.
To top it off, Aquino promised to address the backlog of 66,800 classrooms, which would cost P53.44 billion; a backlog of 2,573,212 classroom chairs at a cost of P2.31 billion; enrolling 36 million Filipinos to PhilHealth at a cost of P42 billion; and the P103 billion required for the modernization of the Armed Forces of the Philippines, among others.
University of the Philippines economics professor Benjamin Diokno said the President needs to implement a "major revamp" of its taxes, if it wants to fulfill his promises.
"There are a lot of things that he can do. You need new taxes to fund the government's expensive program," Diokno, a former budget secretary in the Estrada administration, said.
Diokno said the sin tax bill - one of only two tax measures the President mentioned in his SONA - is not enough to finance the promised programs and projects.
The sin tax bill is expected to raise an incremental P33 billion a year. The other tax measure is the mining revenue-sharing bill, which unlike the sin tax bill, has yet to be drafted and so has no ready revenue estimates.
Diokno said the government may reconsider taxes on petroleum, soft drinks, liquor, and bottled water.
"Water per se is not bad, but the plastic is bad for the environment," he said.
The government also should increase tax collection effort by 15 to 17 percent from 12.3 percent last year.
Victor Abola, economist at the University of Asia and the Pacific, said improving tax administration is "very crucial " for the government to raise more revenues to fund their projects.
"There's so much room for improvements, we only collect between 50 percent to 60 percent," Abola said.
He said some of the infrastructure projects of the administration however are "doable" through the Public-Private Partnership Program.
The PPP Program has been delayed with the government blaming it on "birth pains."
Of the 22 projects the government identified, only two have moved on to the bidding stage.
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