DOF expresses hope over Senate’s speedy passage of tax reform

Date Posted : July 25, 2017

DOF expresses hope over Senate’s speedy passage of tax reform

Date Posted : July 25, 2017

Finance Secretary Carlos Dominguez III expressed the hope that the Senate will swiftly pass the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) at the onset of its second regular session after President Duterte himself renewed his call for the Congress to urgently approve this measure in his second State-of-the-Nation Address (SONA) last Monday.

“With the President’s certification of the TRAIN bill as an urgent and a priority measure, complemented by the personal appeal he made before our lawmakers in his SONA, we are hopeful that the Senate will pass the measure soon enough so that it could be implemented possibly by the third or fourth quarter of the year,” Dominguez said.

The House of Representatives approved with an overwhelming majority of 246 votes the proposed TRAIN as House Bill 5636 last May 31. The Senate is expected to tackle the bill with Monday’s opening of the second regular session of the 17th Congress.

In his SONA, the President said that the TRAIN is designed to be “pro-poor, especially when the people understand how the revenues will be spent.”

He said the “poor and vulnerable are at the heart of tax reform” and congressional support for the TRAIN will ensure that its benefits “can be felt immediately” by these sectors.

Mr. Duterte also cited the primacy of infrastructure investments as a way to sustain high growth over the medium term and attract more investments that will create jobs and help reduce poverty.

Economic growth, according to the President, is contingent on ensuring a safe environment for the people, which is why he will remain relentless in his war against illegal drugs and criminality.

The President also gave marching orders to his Cabinet and all other government officials to implement effective measures to cut red tape and curb corruption.

Besides the tax reform bill, Dominguez said he considers the DOF’s anti-red tape program and the substantial improvements in tax administration as among the key accomplishments of the Department in the first year of the Duterte administration.

The finance chief said that on his watch, the DOF was the only department able to put in place an anti-red tape program headed by Undersecretary Gil Beltran “and we’ve really moved forward with that.”

Dominguez also said the DOF was able to submit to the Congress a tax reform bill less than 90 days into the Duterte administration, which was later approved by the House of Representatives last May 31 as House Bill 5636 or the Tax Reform for Acceleration and Inclusion Act, and is now under consideration by the Senate.

As a result of the close coordination between the Bureaus of Internal Revenue (BIR) and of Customs (BOC), the government was able to nail down what he described as “potentially the biggest collection of taxes” ever from a single entity at one time in the country’s tax history, Dominguez said.

He was referring to cigarette manufacturer Mighty Corporation, which, after three criminal complaints filed by the BIR against it for using counterfeit cigarette tax stamps, has now offered to shutter its business and pay the government a total of P25 billion as settlement of its deficiency excise and income taxes.

Dominguez said the total tax take of the government could reach P30 billion when the VAT and other fees are included in the computations of Mighty’s tax liabilities.

“If you look at it, the coordination between the Bureau of Customs and the BIR have yielded us potentially the largest collection of taxes from an individual at one time ever in Philippine history, And that is because the team works are going well, and we have been able to nail somebody, a really big fish,” Dominguez said.

He also cited the DOF’s accomplishments in improving tax collections in the BIR and BOC, intensifying tax monitoring and enforcement, increasing remittances of the dividends of government-owned and controlled corporations, and cracking down against illegal lenders.

Dominguez earlier said at a Palace press briefing that from the time President took over in July 2016 to May 2017, revenue collections increased to P2.09 trillion, 7 percent higher than the same period in the previous year, in part because of the administrative reforms put in place in the BOC and BIR.

He said the approval by the Congress of the TRAIN bill will ensure steady revenue flow for the government’s massive infrastructure buildup and guarantee a “breakout growth rate” of above 7 percent that will be sustained over the medium term.

This robust pace of growth will, in turn, enable the government to pull down the poverty rate from 21.6 percent today to a significantly lower 14 percent by the time President Duterte leaves office in 2022, making the benefits of growth inclusive for all Filipinos, Dominguez said.

In the first 9 months of the Duterte administration, T-Bill rates averaged 2 percent, the lowest of all previous administrations despite the start of rate normalization undertaken by the US Federal Reserve, while the average inflation rate for the first 11 months stood at 2.64 percent, also the lowest registered in all previous administrations, Dominguez said.

He said the reduced debt load would allow the government “enough flexibility to pump prime our economy” when complemented by a tax reform package that provides funds for the Duterte administration’s planned unprecedented spending on infrastructure, education, health and social protection for the poorest of the poor.

Dominguez also cited the GDP’s robust 6.68 percent growth rate for the first nine months of the Duterte administration, which is faster than the expansion rates in all other previous administrations; the growth in investments spurred by low and stable interest rates; the average inflation rate of 2.64 percent in the first 11 month of the Duterte presidency, and the decline in the debt-to-GDP ratio from 43 percent as of the end-June 2016 to 41.9 percent by the end-March 2017 as among the key factors showing that the government is on track to meet its economic targets.

As a comparison, GDP growth for the first nine months was 4.69 percent in the presidency of Corazon Aquino and 2.10 percent under President Ramos. For the same period, it was 0.17 percent under President Joseph Estrada; 3.0 percent, Gloria Macapagal Arroyo; and 5.98 percent, Benigno Aquino III.


-oOo-

Date Posted July 25, 2017

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The Department of Finance (DOF) is the government’s steward of sound fiscal policy. It formulates revenue policies that will ensure funding of critical government programs that promote welfare among our people and accelerate economic growth and stability. Read More..

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