Finance Secretary Carlos Dominguez on Monday (July 1) expressed confidence the other packages of the Duterte administration’s comprehensive tax reform program would sail smoothly through the 18th Congress as fears of a backlash from the electorate had been proven wrong by results of the May 13 midterm elections.
Dominguez said the election victories of proponents and supporters in Congress of the Tax Reform for Acceleration and Inclusion (TRAIN) law showed support, not opposition to, the administration’s tax reforms.
During its first three years in office, the Duterte administration managed to pass two tax reform packages—the TRAIN Law that took effect last year, and a part of package 1B through Republic Act (RA) No. 11213 or the Tax Amnesty Act of 2019.
According to Dominguez, the last three years of the administration would also see an acceleration of President Rodrigo Duterte’s more than P3-trillion “Build, Build, Build” infrastructure campaign to push yearly economic growth to an ideal 8 percent.
The government, Dominguez added, would also boost foreign direct investments and employment, further improve enforcement of current reforms and boost agricultural productivity.
The TRAIN Law slashed personal income tax rates but jacked up excise on consumption of cigarettes, oil products, sugary drinks and vehicles, among other goods and services.
The pending tax reforms included the remainder of package 1B, which will jack up rates of motor vehicle user’s charge and also implement a general tax amnesty law which hinges on lifting of bank secrecy in fraud cases and automatic exchange of information for tax purposes with the Philippines’ treaty partners.
Package 2, or the Tax Reform for Attracting Better and Higher Quality Opportunities (Trabaho) bill, will not only reduce corporate income tax rate—currently the highest in Asean,—but also reduce forgone revenue by making sense of tax and non-tax incentives for investors.
Package 2 Plus would impose higher excise on “sin” products like tobacco and alcoholic drinks, with an increase in rates for cigarettes already approved by Congress.
Packages 3 and 4 of the tax reform program seek to simplify property valuation and taxation of capital income and financial services and to make these more fair and efficient.
Dominguez said when Sen. Ralph Recto was associated with the increase in value-added tax (VAT) rate to 12 percent from 10 percent in 2001 under the Arroyo administration, “Recto lost the next election.”
“But in this election, all those who supported the tax reform won,” said Dominguez, referring to the May 13 midterm elections.
He cited the case of Sen. Sonny Angara who steered tax reform at the Senate through his ways and means committee.
“I know he was very much concerned about that yet he came out number six,” Dominguez said of Angara’s high ranking in the senatorial race despite Angara’s fear of losing votes for supporting tax reform.
Another case cited by Dominguez was that of Albay Rep. Joey Salceda, who not only supported but christened the tax reform package as TRAIN. He won reelection.
“The story here: if people see that the taxes, whatever tax increases, are being spent for their benefit, it is going to be a plus for the legislators who supported,” Dominguez said.
“I’m very confident that the lessons in this last election where no one who supported the tax reform lost will resonate in the minds of the legislators,” he said.
“The message of the electorate is that the tax reform is fair, and if the money is not stolen and is used for their benefit—infrastructure and education— they [legislators] will win,” he added.
Dominguez had said he was optimistic that all seven packages of the comprehensive tax reform program will be approved by next year.
He said comprehensive tax reform, infrastructure development, and more FDIs, among other additional reforms, will “help us ensure further GDP [gross domestic product] growth, lower poverty” under the Duterte administration’s 10-point socioeconomic agenda. (Editor: Tony Bergonia)