A top World Bank official has lauded the Duterte administration for implementing a “proactive and forward-looking” comprehensive tax reform program (CTRP) that aims to raise enough funding for two priority programs—public infrastructure and social services—that lay the foundation for long-term, high growth.
Lalita Moorty, the World Bank Director of Macroeconomics, Trade, and Investment, also said it is “quite a change” to see a country implementing tax reform proactively with an eye on sustained growth, unlike the common practice for countries to implement such reforms only when they are in the middle of a fiscal crisis.
She said this was impressive because the government has enabled the economy to “grow so much” even as it has managed to bring down its debt-to-GDP (gross domestic product) ratio.
Moorty said the Philippines’ recent accomplishments on the economic front, especially in implementing a tax reform program to enable the government to aggressively increase its investments on infrastructure and social services, has been “quite impressive.”
She also cited the Philippine government’s sound fiscal policies as shown by its declining debt-to-GDP ratio while maintaining rapid growth and increased public spending.
Moorty described the implementation of the Duterte administration’s tax reform program absent a crisis, as a “pro-active and forward-looking” approach to carrying out such reforms.
“It is actually quite a change to see a country that is taking a very forward-looking approach to reforms. (It is) very interesting to see. The Philippines is posting really fast growth rates, about three times of what we see in Europe and Central Asia. I think this is a good time to do these tax reforms. It is a good time and you have seized it. That is quite impressive,” said Moorty during a recent forum on the Philippine economy held in Washington DC.
In her statements about the Philippine economy, Moorty also lauded the tax reform program’s clear priorities of earmarking spending for infrastructure and social services, which she said, “are two critical elements when you are laying foundations for long-term growth.”
“When I think about comparing the Philippines to other parts of the world, it’s managed to do so much and grow so much while bringing its public debt-to-GDP ratios down. It’s very impressive that… it went from over 50 percent to around 40 percent in a decade. That’s quite impressive, in contrast to other countries where we’re seeing a rise in the public debt-to-GDP ratio,” Moorty noted.
Moorty, who was among the panelists during the Philippine Day Forum held in Washington DC last April 11, also said: “All in all, I think this is such a strong and wonderful start when I look at the Philippines in comparison to other countries in the world and I do hope that this continues to progress and accelerate in the near future.”
Finance Assistant Secretary Antonio Lambino II reported during a recent Department of Finance (DOF) Executive Committee meeting that when Moorty’s statements about the Philippines’ commendable growth performance were uploaded on the DOF’s Facebook page, the post was shared over 10,000 times, and totaled over 27,000 likes, with more than 2,000 mostly positive comments.
“The comments that Director Moorty said and that we shared through Facebook, it seemed to bring out a sense of pride among a lot of those who engaged with the post. The comments were very, very positive, and they shared how proud they were that they were Filipino,” Lambino said in his report to Finance Secretary Carlos Dominguez III during the Execom meeting.
Lambino said the post reached almost 690,000 user accounts, which meant it either appeared on their Facebook pages or they engaged with it, and over 47,000 engagement actions—reactions, comments and shares.
In the first 10 quarters—or first two-and-a-half years under President Duterte—actual disbursements for infrastructure and capital outlays totaling P1.64 trillion had already outpaced similar investments of P1.57 trillion made by the previous administration in all of its six years, according to Dominguez.
He said that in the same first 10 quarters on the Duterte watch, economic expansion averaged 6.5 percent.
The country’s debt-to-GDP ratio, meanwhile, continued its downward trend at 41.9 percent in 2018 from 68.5 percent in 2005, and is expected to further decrease to 38.6 percent by 2022, Dominguez has said.
He has pointed out that the hefty reduction in personal income tax (PIT) rates as a result of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law strengthened the purchasing power of consumers, as shown by the double-digit growth in sales and the high-profit margins of publicly-listed retail giants and real estate companies in 2018.
Moreover, national government revenues rose by 15 percent to P2.85 trillion in 2018 while tax revenues grew by 14 percent to P2.57 trillion.
This translates into a tax effort of 14.7 percent last year, which is now significantly better than the regional benchmark and the highest tax effort the government has ever achieved in the past 20 years.
TRAIN revenues reached P68.4 billion, achieving 108 percent of its full-year target of P63.3 billion for 2018 and returned the equivalent of a 14thmonth pay to 99 percent of the country’s salaried workers, or a total of P111.7 billion in 2018.
-oOo-
