Unlike his closest rival in the presidential race, Senator Manuel Villar said he could not promise not to impose new taxes once elected. In a speech before the Makati Business Club (MBC), Villar said it would be “irresponsible” for him to limit his options in putting the country's fiscal house in order. “I cannot make a promise of no new taxes because the new administration will inherit empty coffers,” he said. Instead, Villar vowed to push to raise government revenues and spend these wisely. But he admitted this would not be easy. “Raising revenues is not simple. I am in a position to say this. I am spending my own money (in the campaign).” Villar's arch rival for the presidency, Senator Benigno “Noynoy” Aquino Jr. III said in his talks with the MBC three weeks ago that he would not impose new taxes if he wins in the polls. Aquino, who enjoys the support of members of the MBC, said he was opposed to the idea of imposing new taxes or increasing tax rates. He stressed that lowering tax rates was part of his vision to transform the country. The Philippines booked a budget deficit of P293.2 billion in 2009, an all-time high. The budget gap is expected to reach over P300 billion in 2010. Poor tax collections have been largely blamed for the shortfall. While Villar took the opposite stance from Aquino on tax issue, he echoed his rival's pledge to curb tax evasion and smuggling, the main culprits behind the government revenues. “I am beholden to no one and I will be in a strong position to reduce tax evasion and smuggling,” Villar said. “From day one, I will make clear that there will be zero tolerance of graft and corruption. Sadly, there is no country in the world that has been able to eliminate it completely. I will work hard to reduce it significantly,” he added. Like Aquino, Villar also wants to pursue the restructuring of excise tax on sin products and rationalization of fiscal incentives because he said “all investors want clear rules, simple tax rules.” Villar also aims to bring back the country's tax-to-gross domestic product (GDP) ratio to its level during the time of former president Fidel Ramos. Based on a research by anti-debt advocacy group Freedom from Debt Coalition, the Philippines' tax effort stood at over 13% as of the third quarter of 2009, much less than the 16.22% during the administration of Ramos. The present government was eyeing to achieve a tax-to-GDP ratio of 17% this year. Inefficient tax administration, widespread tax evasion and corruption have contributed to the country's dwindling tax effort. Worsening the problem were the economic crisis, passage of several revenue-eroding laws, and the devastation of back-to-back typhoons. The government hoped to wipe out its budget deficit by 2010, but pushed this goal back to 2013 because of much-needed spending to cushion the impact of the global economic downturn on the economy.
