Finance Secretary Carlos Dominguez III has cited the strong support of the American business community for the first package of the Comprehensive Tax Reform Program (CTRP), which, he said, was submitted by the Duterte administration to the Congress for its approval as a way to help the government maintain fiscal stability, fund its ambitious infrastructure program and expand the delivery of social services to the people.
Dominguez told the American Chamber of Commerce of the Philippines Inc. (AmCham) at its 7th General Membership Meeting that this tax reform package—as contained in House Bill No. 5636 that the House of Representatives approved before its sine die adjournment last May 31—is vital to dramatically improving the country’s business environment and sharpening its global competitiveness in the medium term.
HB 5636 is the consolidated version of HB 4774—the original version of the CTRP Package One endorsed by the Department of Finance (DOF)—with 54 other tax-related measures, and which the House had approved by a 246-9 vote with one abstention. This bill is now pending before the Senate.
“I thank the AmCham for the strong support you have expressed for the comprehensive tax reform package we presented to Congress,” said Dominguez at AmCham’s gathering at the Makati Diamond Residences in Makati City. “This reform package is vital to dramatically improving the country’s business environment and increasing our competitiveness in the next few years.”
According to the DOF secretary, “The tax reform package is intended to achieve fiscal stability, fund the ambitious infra program the administration is pursuing and expand social services. We also intend in the medium term to achieve high middle-income status through the fiscal and economic reforms we are pursuing.”
Dominguez said that, “The infra program is not only about large showcase projects. It also means irrigating 1.3 million more hectares of agricultural land and upgrading our rural road system.”
“But the large projects do matter as well,” he said. “The Mindanao railway system, the Cebu expressway, the improvement of our airports to cope with tourism growth and the construction of a subway to relieve Manila’s traffic predicament will help clear the wayfor sustained economic development.”
He expressed the hope that “you share our optimism about the growth prospects in the near and medium term. We are doing the right things at the right time to take fullest advantage of our demographic strengths and the opportunities offered by the global economy.”
“I hope the members of the AmCham will, as usual, be our strong partners in building broader based prosperity for our people,” he added.
Following a request from the DOF, President Duterte certified two months ago as an urgent measure for congressional approval HB 5636—better known as the Tax Reform for Acceleration and Inclusion Act (TRAIN)—that is crucial to 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 a letter to Senate President Aquilino Pimentel III, President Duterte pointed out that, “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.”
Both the Senate and the House will reopen for the Second Regular Session of the 17th Congress on July 24, when President Duterte is to deliver his second State of the Nation Address (SONA).
Dominguez pointed out in his memo to the President that the tax reform bill is designed to help guarantee a steady revenue flow for the Duterte administration’s unmatched public investments over the next half-decade to support its envisioned “Golden Age of Infrastructure,” attract investments and create jobs, and accelerate poverty reduction.
He said that, “To sustainably finance the massive investments in infrastructure and in the people, tax policy reform will be crucial alongside tax administration and budget reforms.”
“The tax reform seeks to achieve a simpler, fairer, and more efficient tax system characterized by lower rates and a broader base, to encourage investment, job creation, and poverty reduction,” he said.
In his memo to the President, Dominguez also said this measure is “expected to help reduce poverty rate from 21.6 percent in 2015 to 14 percent in 2022, lifting some six million Filipinos out of poverty, and helping the country achieve upper middle-income country status where per capita gross national income increases from $3,500 in 2015 to at least $4,100 by 2022.”