Officials of the Departments of Health (DOH), of Education (DepEd), and of Budget and Management (DBM) have appealed to legislators to swiftly approve the first package of the Duterte administration’s Comprehensive Tax Reform Program (CTRP) that they described as a “win-win” and “pro-poor” measure aimed at dramatically increasing spending not only on infrastructure but also on the development of the country’s human capital.
They said at a recent forum at the Philippine International Convention Center (PICC) that the CTRP deserves the support of every sector because it will enable the government to accelerate spending on education and health as well as on social protection for the poorest of the poor while putting more money in the pockets of 99 percent of the population.
DBM Secretary Benjamin Diokno, who opened the forum, said that the CTRP, “which I strongly support,” is “the second priority in the Duterte administration’s socioeconomic reform agenda to alleviate poverty and unlock the economic potential of the country.”
DOH Undersecretary Lilibeth David said Package One of the CTRP is necessary to enable the government to hike its budget for health care, which is currently one of the lowest among the countries in the Association of Southeast Asian Nations (ASEAN).
David said that adequate spending for quality health care “will mean the poor are not excluded.”
“We really need to support this. I will ask for your support because we need this to improve our health. If you look at the health spending data in countries – even just the ASEAN — the $135 per capita that the Philippines spends on health is so much smaller than what Malaysia spends, which is $456 per capita. Let’s just look at Thailand, $228 per capita. Vietnam spends $142 per capita,” David said, citing 2014 figures from the World Bank’s Health Expenditures Database.
In terms of out-of-pocket spending for health, David said Filipinos still pay 54 percent of their total health expenses with their own money, second to Cambodians who shoulder 74 percent out-of-pocket, David said. But she likewise pointed out that Indonesia has lesser out-of-pocket expenses at 47 percent, and Vietnam with only 37 percent.
“We cannot leave health to markets alone. If we leave it to markets alone, the poor and the marginalized would be excluded. Government has to intervene so that health for the poor, the marginalized, and disadvantaged is inclusive. So with the comprehensive tax reform, finally, quality healthcare will mean the poor are not excluded,” David said.
DepEd Assistant Secretary and chief of staff Nepomuceno Malaluan said education will be a key beneficiary of the CTRP, not only because the bill specifies that a portion of the additional revenues to be collected from it should go to this sector, but also because the government is mandated under the law to give the highest priority to education.
“In our view, certainly, the tax reform package is pro-poor. What is anti-poor is if we come to a tragedy where, as mentioned by (Department of Finance) Undersecretary (Karl Kendrick) Chua, this is not taken as a package,” Malaluan said.
“[Some] individuals in the name of protecting the poor mangle the CTRP and cherry pick those that are popular because of the tax relief. But at the same time end up with a net tax take that is less than where we started from. To us, that will be the biggest tragedy,” he added.
Malaluan was referring to some quarters who are pushing for the approval of only the tax relief portion of the CTRP, which is the lowering of personal income tax (PIT) rates, while abandoning the revenue-enhancing provisions of the tax reform package that aim to broaden the tax base and plug the massive leakages in the current tax system.
According to Malaluan, the CTRP is crucial to delivering quality learning to young Filipinos, especially now when several “cost drivers” have made it even more imperative to spend more on education.
These cost drivers include, he said, the projected increase in elementary and high school enrollees under the K-12 curriculum from 24 million in 2016 to around 27 to 28 million by 2022; upgrading learning aids with modern technological tools; strengthening technical-vocational education under the K-12; and meeting rising rehabilitation expenses for school buildings and facilities affected by climate change.
He said investing more in education and health “will translate to higher incomes and more productive sectors.”
DBM Director Rolando Toledo, who heads the Department’s Fiscal Planning and Reforms Bureau, said the CTRP is a “win-win proposition that we wish our legislators will support enthusiastically.”
The CTRP will make the tax system “simpler, fairer and more efficient,” and “put money in the pockets of 99 percent of our population,” Toledo said.
He said the CTRP is pro-poor because “targeted transfers will be put in place on the part of the DBM to protect the poorest of the poor and the most vulnerable sectors that will be affected by the tax reform.”
Besides the direct positive effects of the CTRP’s first package, David said the pro-health provisions of the measure will also help reduce consumer behavior that causes disease and disability, such as the tax on sugar-sweetened beverages to keep the rising cases of obesity and other metabolic disorders in check, and the adjustments to the fuel excise tax to lessen air pollution and vehicle accidents.
David, Malaluan, and Toledo along with Chua spoke at the two-day ‘Open Government Dialogues” at the PICC that was sponsored by various institutions, including the Union of Local Authorities of the Philippines (ULAP), US Agency for International Development (USAID), DOF and DBM.
Some 200 members of nongovernment organizations, civil society groups and other institutions belonging to the Philippine Open Government Partnership (PH-OGP) who attended the PICC event issued a manifesto that also urged the Congress to immediately pass the CTRP bill.
Prior to this Luzonwide dialogue, the Philippine Chamber of Commerce and Industry (PCCI) and USAID have jointly hosted tax reform roadshows in the provinces of Pampanga, Palawan, Cebu, Bohol, Davao and Cagayan De Oro to inform the public of the benefits of the DOF-proposed CTRP and gather their inputs on how to further fine-tune this tax reform plan now pending in the Congress.
House Bill No. 5636, the substitute bill of the CTRP’s first package also known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, was reported for first reading by the House of Representatives last May 15 and referred to the Committee on Rules for the calendaring of plenary deliberations.
HB 5636 consolidates 55 tax reform measures, including the mother bill—HB 4774—authored by Quirino Rep. Dakila Carlo Cua, who chairs the House ways and means committee.
Chua said the substitute bill contains “moderate modifications” to DOF-endorsed HB 4774, which proposed to lower the rates for PIT, donor’s and estates taxes, along with broadening the tax base by adjusting excise tax rates for fuel and automobiles, and lifting VAT exemptions except for raw food, education, and health, and those enjoyed by seniors and persons with disabilities, among other measures.
Chua said he hopes that the moderate modifications made to HB 4774 would be restored during the House plenary deliberations on the substitute bill.
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