DOF chief to legislators: Don’t let election noise delay tax reform passage

Finance Secretary Carlos G. Dominguez III MALACANANG FILE PHOTO

The head of the administration’s economic team is urging legislators to heed the President Rodrigo Duterte’s call and immediately pass the remaining packages of its comprehensive tax reform proposal despite cynical reception by some sectors.

“Our legislators are currently studying the succeeding packages of the tax reform program. Although they labor under the usual noise that accompanies each electoral season, we are hopeful they will consider the long-term benefits to the country of completing this reform program at the soonest possible time,” Finance Secretary Carlos G. Dominguez III said in a statement on Wednesday.

The first package under the Tax Reform for Acceleration and Inclusion (TRAIN) Act was signed into law by Mr. Duterte in December 2017, while four more packages were pending in Congress, including the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill.

The proposed Trabaho bill was the Duterte administration’s second tax package aimed at slashing the corporate income tax rate from 30 percent at present—the highest in Asean, while rationalizing the fiscal perks being enjoyed by investors to reduce the government’s foregone revenues.

While the Trabaho bill was already passed by the Lower House, deliberations in the Senate were being delayed as some senators prepare for the midterm elections in May next year while also expressing wariness after the TRAIN Law was blamed for the higher consumer prices of late.

“There is no question TRAIN contributed to the elevated inflation rate. The excise taxes imposed on sugary beverages and on cigarette products reflect in higher prices. Those higher prices were intended. They are means to dissuade consumption of harmful products and ensure that our youth will not waste away the opportunities brought about by the demographic dividend. The cigarette and sugary drinks taxes are not meant to stop people who are already addicted to these products. It is meant to stop the kids from getting the habit of smoking and drinking Coca-Cola like I’m addicted to,” Dominguez explained.

But with regards high domestic oil prices, Dominguez said the TRAIN Law was not purely to blame.

“The excise tax of P2.50 imposed on fuel products is a small increment to pump prices. This tax is not responsible for the spiral in fuel prices, Donald Trump is. The global market, over which we have no control, is responsible for this. At any rate, considering the social and environmental impact of fossil fuel consumption, the excise tax is completely justified. Compared to excise taxes imposed on the same products elsewhere, the one imposed by the new tax reform law is negligible,” according to Dominguez.

As for the Trabaho bill, Dominguez said it will “draw more of the direct foreign investments flowing into our region” as well as “benefit hundreds of thousands of micro, small and medium enterprises that employ millions of Filipinos.”

“To be clear, we are not scrapping necessary fiscal incentives. We will continue to provide support for priority investment activities. But we insist that all the incentives be time-bound, tightly targeted, fully transparent and performance-based. This will be best for sustaining the robust economic growth that we now enjoy, and ensuring fairness and accountability in our tax incentives system,” the Finance chief said.  /kga