Can cigarette taxes address deficit?
The year 2009 will go down in fiscal history as the time when huge government deficits all over the world are not only tolerated but actually encouraged by such agencies as the World Bank, IMF, Asian Development Bank, and credit rating agencies. Even our own Budget Secretary is saying that there is nothing to fear until our own fiscal deficit reaches the prudent limit of 4 percent of GDP (the mostly likely deficit this year will only be 3.2 percent of GDP). But next year and the following years will be another thing. As the economy recovers and starts growing again at 6 to 7 percent, the financial watchdogs will resume their vigilance concerning fiscal deficits. We have to demonstrate that we are back on track to attaining a balanced budget in three to four years. That is why it is understandable that officials of the Department of Finance are racking their brains to look for ways and means to significantly raise our tax revenues. It has already become a knee-jerk reaction of some BIR
