MANILA: Budget Secretary Benjamin Diokno has likened redundant fiscal incentives to “pork barrel” as he cited the need to review tax perks that have led to significant losses of state revenues.
Diokno said tax incentives have resulted in revenue losses equivalent to 1 to 2 percent of the country’s gross domestic product (GDP). The GDP is the sum total of the goods and services produced by an economy in a given period.
“We will review the tax incentives. There are many businesses that will remain profitable even if they are not given incentives. The incentives are redundant,” Diokno told radio station dzMM in Filipino last Monday.
“I call the incentives pork barrel on the tax side. If you are a congressman or a senator, you would sponsor a bill that would provide incentives to a sector, which would definitely help you once you seek reelection,” he added.
“Pork barrel” refers to lawmakers’ allocations for their chosen projects. Critics said the system has led to corruption and patronage politics.
“Because of the pork barrel on the tax side, the revenues that the government should be earning to sustain education and welfare are sacrificed,” Diokno said, adding that only the big firms benefit from the incentives.
Bills seeking to rationalize fiscal incentives have been filed in previous congresses but they were bypassed.
Diokno said the administration is also pushing for a bill that would impose a specific tax on gasoline and diesel. Diesel is exempted from excise tax.
“Many rich people drive diesel-run vehicles. The argument that you are not pro-poor if you slap taxes on diesel is no longer applicable,” Diokno said.
