Finance Secretary Carlos Dominguez III has expressed the hope that President Duterte’s call in his 4th State-of-the-Nation Address (SONA) for the Congress to pass reforms in the corporate tax system along with the remaining packages of the administration’s comprehensive tax reform program (CTRP) would provide lawmakers a strong impetus to pass these investment-friendly and job-generating measures within the year.
Dominguez also urged the Congress to consider the President’s SONA statements against smoking and binge drinking as “a call to action” on passing bills that seek to impose higher taxes on electronic cigarettes and alcoholic drinks primarily as pro-health measures.
In his SONA on Monday, the President severely criticized smokers and recalled how in his home city of Davao, a curfew has been imposed on establishments selling alcohol products to compel them to sell liquor only until a specific time.
“We are hoping that the President’s latest pitch for tax reform in his 4th SONA would serve as a strong impetus for the members of the 18th Congress to act on the remaining CTRP packages along with the new excise taxes on tobacco and alcohol products before the year is over,” Dominguez said.
Dominguez thanked the House of Representatives, led by newly elected Speaker Alan Peter Cayetano, for refiling the Duterte administration’s remaining tax reform bills before the opening of the 18th Congress.
“We will go to the Senate and hope they will also file the same bills so that we can get these passed and benefit the economy as a whole,” Dominguez said.
Dominguez said passing the bill reducing the corporate income tax (CIT) rate on a staggered basis from the current 30 percent to 20 percent while redesigning the convoluted fiscal incentives system to make it time-bound, performance-based, targeted and fully transparent will help level the playing field for hundreds of thousands of micro, small and medium enterprises (MSMEs) and draw in more foreign direct investments, which will create more jobs.
The rest of the remaining CTRP proposals include the lifting of bank secrecy laws in fraud cases, the automatic exchange of tax information, and adjustments to the Motor Vehicle Users Charge (Package 1b); the increase in the excise taxes on alcoholic drinks and electronic cigarettes (Package 2 Plus); the proposal to broaden the tax base on property taxes by reforming the property valuation system (Package 3); and rationalizing capital income taxation to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments (Package 4).
“Passing the remaining packages of the comprehensive tax reform program will enhance the modernization of our economy,” Dominguez said. “Completing the entire tax reform program, as endorsed by the President in his 4th SONA, will also ensure a sustainable revenue flow for the government’s infrastructure modernization and human capital development programs, while securing our long-term fiscal stability.”
He said further increasing the excise taxes on alcoholic beverages and e-cigarettes such as heated tobacco and vapor (vaping) products, along with limiting the availability of such products to those similar to tobacco and regular menthol cigarettes, are health measures meant to minimize the habitual use of these non-essential goods, especially among the youth, while at the same time raising more funds for universal health care (UHC).
The Department of Finance (DOF), Dominguez said, will also put on the fast lane the digitalization of the Bureaus of Internal Revenue (BIR) and of Customs (BOC) in response to the President’s renewed order to curb corruption in government and improve frontline government services.
He also said the DOF is now putting in place measures to make the Philippine Tax Academy (PTA) fully operational to further professionalize the ranks of the BOC and BIR, along with the Bureau of Local Government Finance (BLGF) and the country’s local government treasurers.
“As we are widening the tax base, thereby increasing revenues, we are also strengthening enforcement and improving tax administration to raise revenue collection, maximize efficiency and minimize leakages and weed out corruption,” Dominguez added.
As for the President’s directive to the Land Bank of the Philippines (LandBank) to focus more on rural credit, Dominguez said the institution has sufficient funds to accomplish this mission, while pushing through with its acquisition of shares in the Philippine Dealing System Holdings Corp. (PDHSC).
He also pointed out that the LandBank is also working closely with the Department of Agrarian Reform (DAR) in speeding up the distribution of individual land titles to agrarian reform beneficiaries as a means to improve the bankability of small farmers.
Moreover, the LandBank also performs other critical functions such as distributing cash grants to the Pantawid Pamilyang Pilipino Program (4Ps) households and the Pantawid Pasada fuel subsidy beneficiaries, the Finance chief said.
In compliance with the President’s directive, Dominguez said the DOF, along with the Cabinet’s infrastructure team, will continue to speed up the roll out of big-ticket projects under Mr. Duterte’s centerpiece program “Build, Build, Build.”
“The ‘Build, Build, Build’ initiative is the Duterte administration’s most effective weapon to bring down poverty incidence,” he said, “as it will create a lot more jobs, open business opportunities, bring down logistics costs, improve the efficiency of our economy, and enable better-distributed growth to happen across the country. This will be a powerful stimulus driving our rapid economic growth,” Dominguez said.
Dominguez noted that on top of the “Build, Build, Build” program, the Duterte administration has put in place other game-changing initiatives such as rice trade liberalization, which promotes competition by opening up the rice market to both imports and domestic production, while ensuring that farmers benefit directly from import tariffs by providing at least P10 billion each year for mechanization, high quality seeds, access to credit, and training under its Rice Competitiveness Enhancement Fund (RCEF) component.
He also cited the Ease of Doing Business Act, the National ID System, the Tax Reform for Acceleration and Inclusion Act (TRAIN), the tobacco tax reform bill, the UHC Law and the Personal Property Security Act (PSPA) as among the notable market-enhancing reforms that the government has put in place in the President’s first three years in office.
More on TaxReform News
Social mitigation measures in place vs inflation →Date Posted: June 5, 2018
The economic managers assured the public Tuesday that the government is fast-tracking the release of … Continue reading Social mitigation measures in place vs inflation
Fuel tax adjustments to have minimal impact on poor, low-income groups — DOF →Date Posted: January 13, 2017
The Department of Finance (DOF) wants to assure public transport operators and drivers that the … Continue reading Fuel tax adjustments to have minimal impact on poor, low-income groups — DOF
Dominguez thanks Senate for passing its TRAIN version →Date Posted: November 29, 2017
Finance Secretary Carlos Dominguez III said the government is now one big step closer to … Continue reading Dominguez thanks Senate for passing its TRAIN version
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