Last month Standard & Poor’s Rating Services said the Philippines must widen its tax base to have its credit rating increased to investment grade, which was echoed last week by Fitch Ratings.
“We’re not going to raise taxes or make decisions on the fiscal side simply for a ratings upgrade. That is just an indication but that is not an end in itself,” Secretary Ramon Carandang of the Presidential Communications Development and Strategic Planning Office said.
“The ratings upgrade is not the goal necessarily…. Of course, we’ll be happy to have a ratings upgrade and we would welcome it and we feel we deserve it. But we don’t want a ratings upgrade simply for the sake of a ratings upgrade,” he said.
He said the government recognizes the benefits of a credit-ratings upgrade, such as broader access to capital markets and relative lower cost but “the reason we’re really doing this is so that we can make the proper interventions to provide the proper services.”
President Aquino has consistently maintained he is not inclined to push for new tax measures anytime soon as the government has enough fiscal space due to improvements in tax administration, among other things.
The International Monetary Fund had earlier lauded the government’s position not to push for new tax measures since its existing tax reform program “is already delivering.”
“What’s important is our decisions are not based on whether the credit ratings agencies or the multilaterals approve; it’s based on what we believe to be in the best interest of the country—balancing fiscal concerns with equitable growth,” Carandang said.
(Mia Gonzalez)
