Gov’t on track to bring down poverty rate to 14% by 2022
The government is on track in bringing down the poverty incidence to 14 percent of the population by 2022 even as follow-up packages of the comprehensive tax reform program (CTRP) remain pending in Congress, according to Finance Secretary Carlos Dominguez III.
In a statement, Dominguez lamented that the Department of Finance has had to “deal with the vagaries of our politics, the inertia of the bureaucracy and the resistance of those who would rather have things stay as they are.”
Even then, the finance chief said he remained confident that Congress would pass pending CTRP packages this year.
In a report, the Economist Intelligence Unit (EIU) said it expected Package 2 of tax reforms—or the proposed Corporate Income Tax and Incentive Rationalization Act (Citira)—to be passed in the first half of 2020.
The EIU observed that the Duterte administration was “facing delays in reforming the Philippines’ outdated tax code.”
In particular, Citira continued to face delays as businesses lobby over the planned removal of corporate fiscal incentives.
“The resolution of [President] Duterte’s corporation tax reforms will play out this year,” the EIU said. “The President needs to increase tax revenue to fund his commitments to raise social spending and disbursements for infrastructure.”
Dominguez said completing the reform measures would guarantee the revenue flow and the equitable sharing of the contributions to underwrite the government’s social and infrastructure programs as well as ensure long-term fiscal stability.Package 1, or the Tax Reform for Acceleration and Inclusion Act, took effect in 2018 with lowered personal income taxes for 99 percent of wage earners, imposed a tax on unhealthy sweetened beverages, raised taxes on oil products and automobiles, expanded the value-added tax base, and simplified estate and donor’s taxes.
The Citira, or Package 2, is intended to lower the corporate income tax from 30 percent to 20 percent over 10 years to bring it closer to the Southeast Asian average while redesigning the current “convoluted fiscal incentives system.”
Package 3 is aimed at adopting globally benchmarked valuation standards and a higher degree of professionalism in real property valuation.
Package 4, or the proposed Passive Income and Financial Intermediary Taxation Act, is meant to help make the country more competitive in attracting capital and investments by rationalizing the tax system in the financial sector.
“With these CTRP packages and other reforms being put in place, the Duterte administration is well on track in achieving what had seemed at first as an ambitious goal of bringing poverty incidence to 14 percent by 2022 down from 23.3 percent in 2015, as evidenced by official data showing that 5.9 million Filipinos were lifted out of poverty in three years,” Dominguez said.
