Record P3.8-T budget for ’18 pushed
With the first package of the comprehensive tax reform package seen passed next year, the Duterte administration is eyeing to raise the national budget for 2018 to a record P3.84 trillion, as spending on hard infrastructure is seen breaching the P1-trillion mark.
Also, the interagency Cabinet-level Development Budget Coordination Committee (DBCC) said the Duterte administration in its first six months in office managed to substantially narrow underspending in 2016 compared to year-ago level.
Citing a report of the Department of Budget and Management, the DBCC said underspending on public goods and services was substantially reduced this year, as the expected underspending by yearend would reach only P112.4 billion or 4.2 percent of the total expenditure program, compared to P328.3 billion or 12.8 percent of the program last year.
“For 2016, underspending due to government transition and unavoidable delays is projected to be minimal. Disbursements are set to reach P2.53 trillion against the P2.65 trillion full-year disbursement program, suggesting improved budget execution with the anticipated decreased levels of underspending,” the DBCC said.
“The efficiency and timeliness of public expenditure will improve further once other reforms such as 24/7 construction, improved project monitoring, and implementation of shovel-ready projects, have set in,” the DBCC added.
For 2018, the government would pitch a P3.84-trillion national budget, 14.6-percent larger than the P3.35-trillion 2017 budget signed by President Duterte last week, according to the DBCC. The proposed 2018 budget will represent 21.6 percent of the gross domestic product (GDP).
According to the DBCC, the national infrastructure program for 2018 would reach P1.199 trillion, equivalent to 6.8 percent of GDP.
The DBCC said the 2018 budget would be contingent on Congress’ approval of the proposed first tax reform package, as government revenue was projected to hit P2.913 trillion with the help of additional taxes to be introduced to offset the planned lowering of personal income tax rates.
“The projected proceeds of the tax reform package—around P206.8 billion—will fund the government’s big-ticket development projects, particularly the infrastructure program,” the DBCC said.
The Inquirer earlier learned that the Department of Finance had pitched to Congress a revised version of the first package of its comprehensive tax reform proposal, which would now include mandatory marking of oil products as well as the grant of absolute amnesty on estate tax deficiency.
To recall, the DOF submitted to both houses of Congress a bill containing the first package of its tax policy reform program last September, but a number of provisions were frowned upon by legislators, including the removal of value-added tax (VAT) exemption on senior citizens’ nonessential purchases.
A copy of the revised draft showed that the first package “seeks to lower personal income taxes, broaden the VAT base, adjust excise taxes on petroleum and automobiles, reduce the estate and donors tax, and provide an amnesty to past estate tax cases.”
Under the first package, the following tax administration measures are to be pursued: Mandatory use of fuel marking; recognition of e-receipts; mandatory interconnection of large and medium firms point of sale machines and accounting system with the Bureau of Internal Revenue; mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports; shift to quarterly VAT and percentage tax filing to improve compliance; and relaxation of bank secrecy for fraud cases.
While it was initially included in the succeeding tax reform packages, the DOF is now moving to include in the first package the reduction of estate and donors tax to 6 percent, while also providing absolute amnesty on past estate taxes that had been unpaid.
The bill retained the salient provisions of the original first package as proposed by the DOF, including adjusting tax brackets to correct “income bracket creeping”; reducing the maximum personal income tax rate to 25 percent over time, save for the “ultra-rich” who would be slapped a higher 35 percent; and shifting to a simpler modified gross system.
As lower personal income taxes would result into foregone revenues estimated at P127.4 billion by 2018, the DOF plans to offset and gain P301.6 billion by expanding the VAT base by limiting exemptions to necessities such as raw food, education and health products and services; increasing the excise slapped on all oil products and indexing them to inflation; as well as jacking up excise on automobiles.
