The government may have to drastically scale down its “Build Build Build” ambitions, a Cabinet official warned, if Congress fails to pass tax reforms that are expected to fund infrastructure projects nationwide.
“It is very important, without it we will probably not be able to fund less than half (of the infrastructure program),” Finance Secretary Carlos Dominguez 3rd said during a Development Budget Coordination Committee (DBCC) briefing on Wednesday for the Senate Finance Committee.
Asked about the importance of the Finance department-proposed Comprehensive Tax Reform Program (CTRP), Dominguez replied: “More or less it will fund half of the BBB. Not only that, we [also]do not want to breach a deficit of 3 percent of GDP [gross domestic product].”
The government plans to spend P847 billion for infrastructure development this year. In the six years to 2022, spending is expected to hit a total of P8-9 trillion.
Particular focus has been set on 75 flagship projects, 18 of which — valued at P462.74 billion — have been approved by the National Economic and Development Authority board.
The House of Representatives earlier this year approved the Tax Reform for Acceleration and Inclusion or TRAIN measure, which is expected to generate P1.16 trillion in revenues by 2022.
The Senate is considering its own version, Senate Bill 1408 that is basically the Finance department-proposed CTRP. Potential revenues from this are expected to total P998 billion over 2018 to 2022.
Along with complementary measures, total revenues have been estimated to hit P1.34 trillion.
Some senators oppose provisions in SB 1408, which among others calls for tax hikes on products such as cars and fuel to make up for revenue losses from hefty personal income tax cuts.
Under the Constitution, tax measures should originate from the House. The Senate can propose its own measure or concur with the House’s proposals.
Dominguez has said that the Finance department was willing to forego a planned P10 excise tax on sugar-sweetened beverages if the Senate approves SB 1408.