Philippine frontrunner Aquino pledges no new taxes

Benigno "Noynoy" Aquino III, the frontrunner in opinion polls ahead of national elections in May, says he will not impose new taxes or increase tax rates if elected president.

MANILA // Philippine Senator Benigno "Noynoy" Aquino III, the frontrunner in opinion polls ahead of national elections in May, said today he would not impose new taxes or increase tax rates if elected president. Mr Aquino, in his first address to local business leaders since he declared his candidacy in September, said he would pursue the rationalisation of fiscal incentives given to investors as part of efforts to plug revenue leaks and lower the budget deficit. "We will refrain from imposing new taxes or increasing tax rates," he told a forum hosted by the Makati Business Club, a powerful lobby group. "I strongly believe that we can collect more taxes at the BIR (Bureau of Internal Revenue) and higher duties at customs if we become more serious in curbing and punishing tax evasion and smuggling."

The Philippines, failing to raise revenues as it spends more to pump prime the economy, is facing a record budget deficit for the second year in a row. Finance officials have said state revenues dropped last year as corporates paid less income taxes due to the impact of the global crisis and customs duties fell as demand dried up for the country's exports. Mr Aquino, 50, a first-time senator and economics graduate from the Ateneo de Manila University, estimates that around a fifth, or 280 billion pesos (Dh22.4bn), of the Philippines' 2009 national budget was lost due to corruption.

"In addressing the looming fiscal crisis, good governance and the drive against corruption are critical components in our strategy," said Mr Aquino, only son of the Philippines' former president Cory Aquino, the heroine of a 1986 "People Power" revolution that ousted Ferdinand Marcos, who died in August. "Our initial focus then will be to capture a good part of the revenue leaks caused by smuggling and evasion," he said, adding he envisioned a regime of low tax rates that would encourage entrepreneurs to invest and create jobs.

He also said the country's tax-to-GDP ratio must be raised to at least 15 per cent, close to the 1998 levels, from the current 13.4 percent level to make a significant dent in cutting the budget deficit. Mr Aquino has taken an initial lead in opinion polls, but no clear favourite has emerged yet among the presidential candidates. He will be pitted against nine other presidential candidates, including his cousin - the former defence secretary Gilberto Teodoro, billionaire politician Manuel Villar, and the former president Joseph Estrada, in the May elections.

* Reuters