No tax reform, no infra boom
No golden age of infrastructure may be forthcoming if Congress fails to pass soon the comprehensive tax reform package bill, according to Socioeconomic Planning Secretary Ernesto Pernia, who warned that the government’s ambitious “build, build, build” program might become a “small build” or “no build” one.
The bill, which President Duterte on Monday certified as urgent, seeks to raise additional revenue to fund various programs of the government.
Pernia, the latest official to pressure Congress to pass the bill, said the Philippines would also have to go slow when it comes to entering agreements with foreign partners such as China because the country would have to balance spending and indebtedness with its capacity to pay.
“So it’s not going to be the golden age of infrastructure, it will be the bronze age of infrastructure, or maybe the dark age of infrastructure. That is how terrible, that is how unwelcome the non-passage of the CTRP (comprehensive tax reform program) is going to be,” Pernia said in a palace press briefing.
He also said he hoped Congress would pass the tax reform bill as originally proposed by the Department of Finance, which was meant to raise P162 billion in net revenue. With the amendments introduced in the House of Representatives, the current version would only net about P82 billion, he said.
“So it’s not good. Congress should have passed it in toto. They should realize that we in the economic team, our interest is really just the country’s development, the improvement of society. We have no personal agenda at all. And we are trained to do economic analysis, tax analysis. Hence, we know what is best, what is optimal,” he said.
The lawmakers should have more trust in the economic managers, he added.
“I don’t think the legislators are as well-versed as the economic team is, I mean the legislators as a whole. Some of them may be experts, but not all of them, and they work as a whole,” he added.
Pernia also said that if the tax reform package was in place, the GDP level would be higher by between 0.6 percentage point and 1.1 percentage points by 2022.
Inflation would also rise by 1.4 percent in 2018, but he said this would dissipate in the succeeding years.
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