Budget and Taxes

*  BusinessWorld  May 01, 2023. ------------ The pushback against military and uniformed personnel pension reform has come strongly since Finance Secretary Benjamin E. Diokno announced the reforms on March 28. President Ferdinand R. Marcos, Jr. approved the reforms with the concurrence of Defense Secretary Carlito G. Galvez, Jr. and Interior and Local Government Secretary Benhur Abalos. Under Mr. Diokno’s proposal, the reforms will apply to all active personnel and new entrants. It will remove the automatic indexation of pensions to the salary of active personnel of the same rank. Uniformed personnel will start getting their pensions when they turn 57. Mandatory contributions will be required for active personnel and new entrants, similar to GSIS pensioners. These reforms are necessary to address certain economic distortions. For instance, active personnel contribute zero to their future pensions, the cost of which had reached P160 billion a year and is projected to reach P200+ billion

*  BusinessWorld  April 26, 2023. ---------------- Last week, the Development Budget Coordination Committee (DBCC) held a press conference on the revised macroeconomic and fiscal targets from 2023-2028. The DBCC — or the economic team — is composed of the Secretaries of the Departments of Finance and Budget and Management (DoF and DBM), the National Economic and Development Authority (NEDA), and the Governor of the Bangko Sentral ng Pilipinas. It is good that the economic team is keeping the original growth targets at 6-7% for 2023, and 6.5-8% for 2024-2028. As argued in this column last Monday, the Philippines’ quarterly GDP growth momentum in 2022 plus employment data as of February 2023 show that the domestic economy is dynamic, and local businesses can sustain a virtuous cycle of production-consumption at higher and rising levels. I also think that the macroeconomic assumptions to make the growth projections are realistic. For instance, the Dubai crude price of $70-$90/barrel for 2

*  BusinessWorld  April 24, 2023. ------------ Last week, on April 20, the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) led by the Department of Finance and the National Economic and Development Authority (NEDA) held a principals level (Secretaries and Undersecretaries only) meeting to tackle persistent high prices in the Philippines. Based on first quarter (Q1) or January-March 2023 average inflation rate, the Philippines has the highest level of inflation in East Asia at 8.3% while Singapore had the highest jump, from only 0.7% in Q1 2021 to 6.5% in January-February 2023. There is no March data yet as of this writing. In Europe, the UK, Italy and Germany are still worse off (see Table 1). The main sources of the Philippines’ high inflation in Q1 were alcoholic beverages and tobacco due to the continued rise in sin taxes; food and non-alcoholic beverages due to some supply disruption plus the sugar tax; transport due to still high prices of oil products; and water-