Think tank: Congress already needs whipping from Du30 to pass tax package | Inquirer Business

Think tank: Congress already needs whipping from Du30 to pass tax package

By: - Business Features Editor / @philbizwatcher
/ 03:00 AM February 21, 2017

The Duterte administration has a good chance of having the much-awaited tax reform package enacted by Congress this year but there’s a 40 percent chance that the final version will be watered-down.

This is based on the assessment of New York-based think tank Global Source, which said that the sooner the proposed tax package is passed, signed and implemented, “the sooner this administration can start to win back the confidence of investors who may have found events in the last six months too volatile for comfort.”

In a commentary written by economists Romeo Bernardo and Marie Christine Tang dated Feb. 17, Global Source said “seeing the red flags and presumably in search of good news to perk up markets and bolster confidence in this administration’s ability to deliver on the promised golden age of infrastructure,” the often asked question these days was: Will Congress pass the Department of Finance’s (DOF) proposed tax reform package, and soon?


The implied query, the research said, was how far would the President go in spending his still quite high political capital to ensure that members of Congress passed the bill that his finance secretary wanted in order to generate about 1 percent of gross domestic product in incremental revenues.


The think tank noted there has already been necessary compromises and recalibration of estimated revenue gains at the House of Representatives.

It noted such kinds of reforms in the country “require close shepherding by the executive” as they go through the long and tedious legislative process.

“The fear is that if the President does not personally ask, cajole, insist, or even threaten, the final bill passed may not be in the shape and form that the executive proposed. Policy wonks further pointed out to us that senators facing reelection in 2019, including the chair of the ways and means committee, may be more cautious of appearing to champion painful tax increases,” the research said.

While Finance Secretary Carlos Dominguez and his team have been quite successful in garnering public support for the measure, Global Source said it has “yet to see or hear the President himself backing the tax package with half as much zeal as he does the drug war, a necessary condition we think to achieving the target yields.”

“At a minimum, we expect the President to be more engaged in pushing for the tax bill through regular sessions of the Legislative-Executive Development Advisory Council. And recognizing that time is ticking,” it said.

The DOF believes the first package of the tax reform would be passed middle of this year. In the “worst” case, the legislative process could even reach the end of the year, it said.


Global Source is betting on a yearend goal.

The first package of the tax reform program seeks to lower personal income tax and estate donor taxes. To compensate for loss in revenues, the package also expands the coverage of the value-added tax, increases the tax rates on automobile and updates excise tax on oil alongside other complementary revenues.

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TAGS: Business, Congress, economy, News, tax

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