MANILA (BLOOMBERG) - Philippine President Ferdinand Marcos Jr pushed for a tax on digital service providers to help narrow budget deficit, pledged to sustain robust spending on infrastructure and vowed never to enforce another lockdown as he aimed to hit an 8 per cent growth during his term.
"Our tax system will be adjusted in order to catch up with the rapid development of the digital economy," Mr Marcos Jr said in his first speech before Congress on Monday (July 25), laying down his legislative agenda that includes a continuing tax reform, changes to energy and infrastructure-enabling laws, and streamlining government operations.
Imposing value-added tax on digital services, which is Marcos’s first revenue-generating proposal, will yield an initial 11.7 billion pesos (SS$289 million) in revenue in 2023 if passed by Congress, he said.
Boosting collections, also by simplifying and automating tax processes, would help cut debt below 60 per cent of gross domestic product by 2025 and narrow the budget deficit to 3 per cent of GDP by 2028, he said.
The South-east Asian nation aims to expand GDP by 6.5 per cent to 7.5 per cent this year and grow by as much as 8 per cent through the end of his term in 2028, Mr Marcos Jr said, reiterating projections made by his economic team earlier this month.
The last time the Philippines recorded growth above 8 per cent was in 1976 under the late dictator Marcos Sr, the president’s father and namesake.
While the Philippines remains one of Asia’s fastest growing economies, the quickest inflation since 2018, rising interest rates and a weaker currency are threatening its pandemic recovery.
To this, Mr Marcos Jr vowed to keep the economy open, resume in-person education and provide relief to the agriculture sector.
“We can’t afford another lockdown. We need to balance the health and well-being of our countrymen on one hand and the economy on the other,” Mr Marcos Jr said, prompting applause and standing ovation from lawmakers.
“Spending efficiency will be improved to immediately address the economic scarring arising from the effects of Covid-19, and prepare for future shocks.”
He vowed to build the country’s healthcare capacity especially outside the capital Manila and support the welfare of nurses and doctors.
In a bid for more investment, Mr Marcos Jr said the country’s economic zones would be equipped to welcome companies in healthcare.
The trade department, he said, is in talks with manufacturers of generic medicines to bring down the cost of drugs.
Mr Marcos Jr, who is also the agriculture secretary, proposed a one-year moratorium on farmers’ loan payments and write off some obligations to give the sector some breathing space.
The Philippines must build new power plants and reexamine its strategy on nuclear power, Mr Marcos Jr said, citing rising demand. It must take advantage of renewable energy, such as solar and wind, and also study providing incentives for gas exploration.
The government will also look into the nation’s “precarious” water supply situation and explore ventures with private companies, he said.
Mr Marcos said he will build on his predecessor’s infrastructure programme to help drive growth and employment, vowing to sustain spending at 5 per cent of GDP.
“We must keep the momentum, and aspire to build better more.”
On foreign policy, Mr Marcos Jr said he will “not preside over any process that will abandon even a square inch of territory” to any foreign power.
“We will not waver. We will stand firm in our independent foreign policy, with the national interest as our primordial guide.”