Philippines eyes new taxes to fund economic stimulus amid coronavirus pandemic

Lawmakers are considering taxes on everything from online casinos to Facebook ads and Netflix subscriptions to help bankroll additional spending

Though they could slow economic activity, Manila needs new sources of revenue if it is to keep the fiscal deficit at 9 per cent or less of GDP

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People shop at a makeshift market in Quezon City, Metro Manila. Photo: Bloomberg

Published: 11:00am, 18 Jun 2020Updated: 11:00am, 18 Jun 2020

The Philippines is considering introducing a raft of new taxes to fund economic stimulus in the wake of the coronavirus pandemic, despite the risk that these levies could slow economic activity even further.

With an economy that is expected to contract by the most in at least three decades this year, the Philippine government’s ability to marshal fiscal stimulus is limited. Its commitment to keeping the fiscal deficit at 9 per cent or less of gross domestic product means Manila can spend only about another 180 billion pesos (US$3.6 billion) unless it finds new sources of revenue, Finance Secretary Carlos Dominguez has said.

Lawmakers are considering taxes on everything from online casinos to Netflix subscriptions to help bankroll additional spending.

The proposals “are meant to raise revenues without eroding growth or significantly affecting the poor and the working class”, according to a policy brief sent by congressman Joey Salceda, who heads the Ways and Means Committee in the Philippine House of Representatives.

The Philippines is considering expanding value-added tax to cover subscription-based services like Netflix. Photo: Reuters

Governments across Asia are looking at new sources of revenue for spending against the virus’s blow. India is considering increasing import levies on edible oil, while Indonesia and Thailand are preparing regulations to collect value-added-tax on digital products.

In the Philippines, the government’s antivirus fiscal package amounts to 3.1 per cent of GDP, said Jessie Lu, a Singapore-based economist at Continuum Economics. That “pales in comparison with its regional peers,” such as Malaysia and Singapore, which have each announced stimulus worth nearly 20 per cent of GDP.