Tuesday, September 25, 2018
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Senate version to slow down infra plan

By: - Reporter / @bendeveraINQ
/ 05:03 AM October 03, 2017

The Senate version of the first package of the Duterte administration’s comprehensive tax reform program will generate only P59.9 billion in net revenue next year, a meager amount such that the country’s chief economist warned yesterday that the government might defer the rollout of some big-ticket infrastructure projects.

The latest preliminary Department of Finance data released also yesterday showed that the estimated total incremental revenues under Senate Bill No. 1592 introduced last month was the lowest compared to the DOF’s original proposal of P157.2 billion as well as House Bill No. 5636’s P119.4 billion.


The first package, aimed at slashing personal income tax rates while jacking up taxes on consumption, is currently undergoing deliberations in the Senate after it was approved by the House of Representatives in May.

Under the Senate version, the revenues from value-added tax (VAT) were reduced to just P14 billion compared with the DOF’s P89.2 billion and the Lower House’s P60.9 billion as senators retained the exemptions of cooperatives, electric cooperatives as well as power transmission, among others.

The P40-billion revenues expected from higher oil excise taxes under the Senate bill was also nearly half of the gains from the DOF proposal and HB 5636 as the incremental increase would be slower at P1.75, P2 and P2.25 a liter over the next three years compared with the House-approved P3, P2 and P1.

The P37.4 billion in additional revenues from sugar-sweetened beverage tax under SB 1592, which has lower rates of P5 a liter for beverages with caloric sweeteners and P3 for those with non-caloric, was likewise below the DOF proposal of P47 billion and HB 5636’s P52 billion.

Under the proposed 2018 P3.77-trillion national budget, P134 billion has been assumed to come from the first tax reform package.

Asked if some infrastructure projects might not push through as a result of a shortage in revenue gains, Socioeconomic Planning Secretary Ernesto M. Pernia replied to reporters: “That could be the logical outcome.”

Comprehensive tax reform was one of the sources of funding to be tapped for the Duterte administration’s ambitious “Build, Build, Build” program aimed at ushering in “the golden age of infrastructure.”

Under “Build, Build, Build,” the government will roll out 75 flagship infrastructure projects, with about half targeted to be finished within President Duterte’s term, alongside plans to spend a total of up to P9 trillion on hard and modern infrastructure until 2022.

“We’re still hoping that the Senate version will improve and move closer, if not to the same level of the House version at least,” Pernia said on the sidelines of the opening ceremony of the 28th National Statistics Month.


For Pernia, “VAT exemptions really have to be broadened—we have to be comparable to our Asean neighbors that really have broad-based VAT [regimes].”

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