Finance Secretary Carlos G. Dominguez III welcomed the decision by the House Committee on Ways and Means to approve in principle the first package of the government’s Comprehensive Tax Reform Program (CTRP) as a whole and not on a piecemeal basis.
Dominguez said the legislature’s decision to pass the tax reform in its entirety rather than on a piecemeal basis would help the government fund an ambitious infrastructure buildup program.
Dominguez issued the statement after the committee, chaired by Quirino Rep. Dakila Carlo E. Cua, at the public hearing on the CTRP approved in principle the tax reform as a package, subject to the creation of a technical working group (TWG) that would draw up a substitute bill consolidating the proposed reforms with other tax-related proposals.
The government’s overall objective is to sustain the country’s high-growth momentum, cut poverty and transform the Philippines into a high middle-income economy by 2022.
According to the Department of Finance, this means the measure would be tackled as a package, rather than per individual tax proposal. This ensures the CTRP is discussed by the TWG in its entirety.
This puts to rest concerns that the committee would only approve the bill’s popular provisions, which lowers of the personal income-tax (PIT) rates without the corresponding measures that would enable the government to raise funds for its public investment program and offset the revenue erosion arising from the reduced PIT.
Package One of the DOF-proposed CTRP is outlined in House Bill (HB) 4774, which aims to lower PIT rates while providing revenue-enhancing measures which seek to reform the excise-tax system for fuel and automobiles, and broaden the value-added tax (VAT) base while retaining exemptions for seniors and persons with disabilities.
The TWG forms the venue for the discussion of issues by stakeholders and consolidates all other bills related to the measure and come up with a substitute bill that would later be submitted to the House Ways and Means Committee for approval. The TWG include members of the House Ways and Means Committee and the DOF.
Dominguez expressed the hope that other members of the House of the Representatives, as well as the Senate would see the urgency of passing the tax-reform package in full, possibly by the middle of this year, to set the economy on an irreversible path to high and inclusive growth.
“Package One of the CTRP, as contained in HB 4774, is the launching pad for the Duterte administration’s 10-point socioeconomic agenda that aims to transform the Philippines into an upper middle-income economy by the time the President steps aside in 2022 and into a high-income one in one generation or by 2040,” Dominguez said.
Earlier, President Duterte stressed the importance for Congress to pass the CTRP in full so the government could raise enough funds for its priority programs.
Dominguez said the congressional assent on the DOF-proposed CTRP would help create a strong buffer that will insulate the country from the surge of protectionism now sweeping across the globe, and help keep the economy on its targeted annual expansion of 7 percent or better.
“By doing so, Congress would let the Duterte administration gain headway in its ambitious medium-term agenda to keep the country among Asia’s fastest-growing economies, cut the poverty rate from 21.6 percent to 14 percent, and transform the country into an upper-middle economy by way of investment-driven in lieu of consumption-led growth,” Dominguez said.