Tax reform, which has provided income tax cuts for individuals and corporations to unleash their economic potential while raising funds for the administration’s unprecedented “Build, Build, Build” infrastructure modernization program, is among the key achievements of the Duterte presidency, Finance Secretary Carlos Dominguez III has said.
Dominguez said that with several packages of the Duterte administration’s comprehensive tax reform program (CTRP) and other economic reform measures in place, the Duterte administration has now accomplished “85 percent of what we have set out to do” on “the economic side.”
As head of the government’s economic team, Dominguez led efforts in getting the Tax Reform for Acceleration and Inclusion (TRAIN) Law and, later, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act passed in Congress.
TRAIN (Package 1 of the CTRP) provided substantial personal income tax (PIT) cuts for 99 percent of the country’s wage earners after two decades of non-adjustment of the rates while CREATE (Package 2) reduced the corporate income tax (CIT) rate from 30 percent to 20 percent for micro, small and medium enterprises (MSMEs), and to 25 percent for all other businesses.
CREATE, which introduced significant improvements in the grant of tax incentives by making it more accountable and transparent, was passed decades after versions of the reform were introduced in the legislature during previous administrations.
Meanwhile, Package 1-B, enacted as the Tax Amnesty Act, lets errant taxpayers affordably settle their outstanding tax liabilities, allowing for a “fresh start,” while also providing the government with additional revenues for its priority infrastructure and social programs.
Reforms that aimed to raise taxes on “sin” products such as tobacco, e-cigarettes, and alcohol were enacted under the Duterte administration through the passage of TRAIN followed by two more sin tax laws in 2019 and 2020.
Dominguez said tax reform is a major component of President Duterte’s overarching goal of reducing poverty, which his administration has kept on track as shown by the reduction in poverty incidence to 16.7 percent in 2018, from 23.3 percent in 2015, until the COVID-19 pandemic last year disrupted the growth of economies across the globe.
“If you look at the presidency of President Duterte, I think as a whole he has been quite successful. And in the economic side, especially which I and (Socioeconomic Planning Secretary) Karl (Kendrick Chua) and several others are involved in, I think we have achieved maybe 85 percent of what we set out to do,” Dominguez said in a television interview after the President delivered his 6th and final State-of-the-Nation Address (SONA) on Monday.
In his last SONA, the President credited the “brilliant programs and excellent work of (the government’s) economic managers and the extraordinary cooperation between the executive and the legislative branches of government” in leapfrogging the Philippines into “the company of the world’s fastest-growing economies until the COVID-19 pandemic stalled everything.”
Tax reform was also a critical factor in keeping the economy strong and healthy as it has allowed the government to raise more revenues to fund its flagship “Build, Build, Build” program and maintain fiscal sustainability when the country needed to expand its financial resources to meet the enormous requirements of COVID-19 response, Dominguez said.
President Duterte also acknowledged this in his SONA, as he pointed out that infrastructure investments rose to an average of 5 percent of the country’s gross domestic product (GDP) on his watch, which is “significantly higher than the infrastructure spending of each (of the) past four administrations.”
“Thanks to the comprehensive tax reform program that enabled us to fund critical infrastructure projects. Today, we can see the tangible results all around,” President Duterte said.
Aside from reducing poverty, Dominguez said President Duterte also achieved his goal of making the Philippines a “more law-abiding” country, which was demonstrated on the economic side with the heightened crackdown on tax evaders, Dominguez said.
The Department of Finance (DOF) made history in 2017 by collecting from an errant cigarette manufacturer a total of P30 billion, the biggest sum on record raised by the government from a tax settlement, which was the result of the relentless joint campaign by the Bureaus of Internal Revenue (BIR) and of Customs (BOC) against tax cheats.
The Duterte presidency is also the first administration to have raised “sin” taxes thrice in its term.
Dominguez said the President also achieved his third goal of peace within and outside the country’s borders, as shown by the Philippines’ warm and cordial relations with its Asian neighbors and other countries, and the historic passage of the Bangsamoro Organic Law (BOL), which has established a new Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), and led the country closer to lasting peace in the South.
The DOF Secretary is playing a crucial role in helping ensure the success of the new Bangsamoro region as co-chairman on the side of the national government in the Intergovernmental Relations Body (IGRB) and the Intergovernmental Fiscal Policy Board (IFPB) with the BARMM.
More on TaxReform News
LGU accountants, gov’t workers back tax reform →Date Posted: June 19, 2017
The country’s association of local government accountants and an umbrella group of over 400 public … Continue reading LGU accountants, gov’t workers back tax reform
E-cigarette manufacturer backs ‘sin’ tax reform →Date Posted: February 3, 2020
A major manufacturer of cartridge-based electronic cigarettes has committed to fully comply with a new … Continue reading E-cigarette manufacturer backs ‘sin’ tax reform
Gov’t seeks end to indiscriminate grant of costly fiscal incentives →Date Posted: October 26, 2018
The Department of Finance (DOF) said that while the government recognizes the value of tax … Continue reading Gov’t seeks end to indiscriminate grant of costly fiscal incentives
Over 1,000 entrepreneurs take part in ‘Sulong’ regional forumsDate Posted: April 29, 2019
More than 1,000 entrepreneurs, mostly representing small and medium enterprises (SMEs), were consulted by the … Continue reading Over 1,000 entrepreneurs take part in ‘Sulong’ regional forums