MANILA — If the second package of the government’s Tax Reform for Acceleration and Inclusion (TRAIN) law is not passed, the government may have to borrow money, Department of Education (DepEd) Secretary Leonor Briones warned Wednesday.
Briones, who was a former national treasurer, made this remark amid lawmakers’ hesitance to approve the proposed TRAIN package 2 despite the call of President Rodrigo R. Duterte to pass it before the year ends.
“If Congress passes the budget but does not pass the TRAIN law, then (the) government will have a problem because we will have to borrow,” Briones said in a Palace briefing.
“The adverse effect is obvious — government would have to borrow and interest rates would be higher. Because if Congress will approve, and normally it will approve the proposed budget of the President, the source of the funding will not be made available then the recourse is to borrow,” she added.
The education chief recalled the Philippines’ economic situation in the 1980s, when the country was drawn into the global debt crisis and took years to finally recover.
According to Briones, it was also not advisable to cut down on expenditures because of peoples’ rising expectations from the government such as free college tuition, increased infrastructure, jobs, and assistance to the poor.
“No to decreases in expenditure, no to borrowing. That leaves us with raising ourselves, growing by our own,” Briones said.
“This is usually the preferred mode, raising taxes, because we want development, we want more schools, we want more roads, we want more allowances for the poor,” she added.
Better option
Briones, however, acknowledged the “painful” impact of inflation, noting that she herself felt the burden of the rising prices of goods and services.
She said although the people had the tendency to blame the government for raising taxes, mitigation measures are being put in place to help cushion its effects.
“The policy objectives of TRAIN is acceleration and inclusion not only spreading the tax net but also inclusion in the sense of making available government services to more and more Filipinos,” she said.
She added that it was incorrect to blame TRAIN for inflation because there were external factors that played a role, which include the rise of oil prices in the world market and the movement in exchange rates.
“It’s not easy to deal with it and the emotional response is to blame taxes but government is taking this very, very seriously, taking social mitigation measures,” Briones said.
“I believe taxes is the better option but we will have to watch where the taxes go,” she added, noting that suspending a revenue generator like TRAIN will “do more harm than good.”
Briones explained that although there was a “strong resistance” to taxes because it has been described as an imposition, the peoples’ attitude has to change.
“No human likes imposition, no human likes to be forced to pay something. But this time our attitude has to change because taxes now will pay for the education of our children, taxes will pay for the bridges that will allow the children to cross rivers without swimming across them to go to school, taxes will build hospitals, taxes will perhaps help create jobs,” Briones said.
“We have no choice, it’s either taxes or borrowing. It’s either taxes or no schools, no hospitals, no offices, or no relief for our poor. The challenge for us is not only to help the public, shift from their mindset about taxes but also to watch where the taxes go,” she added.