Ex-finance chief urges swift passage of tax reform package

Date Posted : April 21, 2017

Ex-finance chief urges swift passage of tax reform package

Date Posted : April 21, 2017

Former Finance Secretary Margarito Teves has said that now is the most “conducive time” for the Congress to approve the first phase of the proposed Comprehensive Tax Reform Program (CTRP), given the wide and deep popular support for President Duterte and the country’s strong macroeconomic fundamentals.

In expressing anew his support for the CTRP’s first package, Teves pointed out during one of the public hearings at the House of Representatives that the refined version of the measure, as contained in House Bill No. 4774, “is more balanced” because of components that benefit both the poor and the middle class.

Also, Teves pointed out before lawmakers that passing the CTRP now is less problematic for them, as “it is not close to the election season when it is usually more challenging to tackle and pass bills in both Houses of Congress.”

“We agree with the proponents of tax reform that a window of opportunity exists to take the Philippines to the next level of development. Now is a conducive time to pass the tax reform package because, aside from the strong macroeconomic fundamentals, President Duterte continues to enjoy high popularity and trust ratings across geographic and socioeconomic classes,” he said at a recent hearing of the House ways and means committee on HB 4774.

Filed by the committee chairperson Rep. Dakila Carlo Cua, HB 4774 aims to lower personal income taxes and provide revenue-enhancing measures such as adjusting the excise tax rates on fuel and automobiles and expanding the Value Added Tax (VAT) base but retaining exemptions for seniors and persons with disabilities.

Before the Lenten break of the Congress, the House Ways and Means Committee chaired by Cua already agreed in principle to tackle the bill as a package, which puts to rest concerns that the Congress might abandon the revenue-generating measures of the proposal and only pass the revenue-eroding portion lowering income tax rates.

Teves, who as DOF secretary under the former Arroyo administration shepherded the Philippines’ economic reform policies at a time of global economic turmoil in 2008, also recommended regular meetings of the Legislative-Executive Advisory Development Council (LEDAC) to closely monitor the tax reform bill’s progress “and determine what adjustments” the executive and legislative branches need to make to pass the measure.

“Frequent LEDAC meetings would send a strong signal or message that tax reform is indeed a priority of the Duterte administration,” Teves said.

He said separate measures that would further strengthen the tax policy reforms provided under HB 4774, such as the proposals to exempt the Bureau of Internal Revenue from the Salary Standardization Law (SSL), the strict implementation of the Lateral Attrition Act and the creation of a National Revenue Authority, should also be strongly considered by the Congress.

Teves was recognized by the London-based international finance magazine, The Banker, as Asia’s Best Finance Minister in 2009. He was recognized for the reforms he had implemented that led to “progressive improvements in revenue collection, lower public debt levels and more stable finances at the state-owned enterprises” which enable the country to weather the “global credit crunch in a much less vulnerable position than during the past financial crises.”

A former congressperson, Teves said passing the legislative proposals of Speaker Pantaleon Alvarez and Cua to exempt the BIR from the SSL, which should be accompanied by the strict implementation of the Lateral Attrition Law, “would ensure that BIR personnel are adequately compensated and therefore, more likely to resist temptations such as bribes.”

At a House ways and means committee hearing, Cabinet Secretaries and five undersecretaries came in full force to demonstrate their unequivocal support for the CTRP, which aims not only to make the country’s outdated tax system simpler and fairer, particularly for low – and middle-income earners, but also to set the Philippines off to the “irreversible path” of becoming a high-income economy in one generation or by 2040.

Attending the hearing were Secretaries Carlos Dominguez III of the Department of Finance (DOF), Benjamin Diokno of the Department of Budget and Management (DBM), Ramon Lopez of the Department of Trade and Industry (DTI), and Ernesto Pernia of the National Economic and Development Authority (NEDA).

Secretaries who were also present at that hearing of the Cua-chaired committee to express their 100 percent support for the CTRP were Secretaries Arthur Tugade of the Department of Transportation (DOTr), Mark Villar of the Department of Public Works and Highways (DPWH), and Leonor Briones of the Department of Education (DepEd).

Also in attendance were Undersecretaries Lilibeth David of the Department of Health (DOH), Noel Leyco of the Department of Social Welfare and Development (DWSD), Garry de Guzman of DOTr, Laura Pascua of DBM and Annalyn Sevilla of DepEd.

Commissioners Caesar Dulay of the Bureau of Internal Revenue and Nicanor Faeldon of the Bureau of Customs was also present at the hearing.

The CTRP has gained the support of 14 former DOF secretaries and undersecretaries plus five former NEDA directors-general, who earlier released a joint manifesto stating that the tax reform plan would “correct the structural weaknesses” of the country’s system and serve as a tool to decisively attack poverty and achieve inclusive growth.

Signing the joint manifesto were ex-DOF Secretaries Cesar Virata, Jose Isidro Camacho, Jesus Estanislao, Roberto De Ocampo, Jose Pardo, Cesar Purisima, and Juanita Amatong; ex-NEDA chiefs Arsenio Balisacan, Emmanuel Esguerra, Cielito Habito, Felipe Medalla, and Romulo Neri; and former finance undersecretaries Romeo Bernardo, Cornelio Gison, Lily Gruba, Milwida Guevara, Jose Emmanuel Reverente, and Florencia Tarriela.


-oOo-

Date Posted April 21, 2017

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