THE Department of Finance (DOF) thanked the House of Representatives for approving on third and final reading the proposed Tax Reform and Acceleration for Inclusion Act (TRAIN) and expressed optimism that, with President Duterte declaring it an urgent measure crucial to his administration’s massive expenditure program, the Senate would similarly pass the measure soon enough when the 17th Congress reopens in July.
A total of 246 lawmakers voted in favor of the TRAIN, with nine against and one abstention.
Finance Undersecretary Karl Kendrick T. Chua said the DOF will present its case before the Senate in July with the hope the senators would retain TRAIN in its original form.
The original DOF-endorsed version outlined in House Bill (HB) 4774, authored by Rep. Dakila Carlo E. Cua of Quirino, was consolidated with 54 tax-related measures into the substitute bill HB 5636, which is now the TRAIN.
The 17th Congress will end its adjournment sine/die on July 24, when Duterte is to deliver his second State of the Nation Address (Sona).
The President has certified as urgent measure the proposed TRAIN because it will help ensure the financial sustainability of the government’s ambitious agenda to sustain the country’s growth momentum and accelerate poverty reduction via a massive spending on infrastructure, human capital, and social protection for the poor and vulnerable sectors.
In separate letters sent to Senate President Aquilino L. Pimentel III and Speaker Pantaleon D. Alvarez, the President said: “The benefits to be derived from this tax-reform measure will sustainably finance the government’s envisioned massive investments in infrastructure, thereby encouraging economic activity and job creation, as well as fund the desired increase in the public budget for health, education and social programs to alleviate poverty.”
Finance Secretary Carlos G. Dominguez III said the TRAIN aims to make the country’s antiquated tax system simpler, fairer and more efficient, especially for the poor and low-income families, by making sizable cuts in personal income tax, make up for the projected revenue loss and, at the same time, raise funds for the massive expenditure program by expanding the value-added tax (VAT) base and adjusting excise taxes on oil, automobiles and other products.
Chua said the DOF-endorsed first package of the CTRP now pending in Congress is the key to making the economy truly inclusive and helping the poorest Filipinos rescue themselves from the poverty trap.
“In the next six years, the Duterte administration seeks to liberate 6 million Filipinos from poverty and transform the country from a lower middle-income to an upper middle-income economy by 2022, like Thailand and China today, and onward to become a prosperous country where no one is poor by 2040, that is one generation from today, the generation of our children or grandchildren—our future,” he said.
Chua said attaining inclusive growth and getting the private sector to invest more is to undertake an unparalleled “Build, Build, Build” infra program, complemented by massive investments in the country’s human capital.
These unparalled investments from 2016 to 2022 totaling P2.2 trillion will require an additional P718 billion for education, P139 billion for health, P267 billion for social welfare, and P1.1 trillion for urban and rural infrastructure.
“All these require new revenues, but we will share the responsibility together. The Executive commits to improving tax-collection efficiency and addressing smuggling, while fully spending the budget as planned. All these are currently happening. We will also borrow because the conditions are right and our infrastructure needs are vast. Our supporters also commit to paying the right amount of taxes,” he said.
Such measures, however, are not sufficient to keep the government’s ambitious spending program fiscally sustainable, Chua said.
“We also need tax policy and we ask Congress to pass a program of tax reforms that will, once and for all, correct the complexity, inefficiency and inequity of our tax system that holds back economic growth, job creation and poverty reduction,” he added.