Sharing her “sad experience with tax reform,” former president and now Pampanga congresswoman Gloria Macapagal-Arroyo has cautioned Congress against passing the Duterte administration’s CTRP (Comprehensive Tax Reform Program) provisions separately instead of as a package.
When she asked lawmakers in 2008 to pass a revenue measure to fund her request for a supplemental budget, they did so but only tax-eroding provisions in 2009 and did away with the portion that would have offset the revenue loss.
As a result, the government lost P14 billion in revenues, Arroyo recently told members of the House ways and means committee headed by Rep. Dakila Carlo Cua during a hearing on the proposed CTRP.
Under the Constitution, a supplemental appropriations bill should be supported by funds available in the National Treasury or by funds to be raised through a corresponding revenue proposal.
The first package of the CTRP that was approved last March 14 aims to lower personal income tax (PIT) rates, while at the same time, providing for a corresponding set of revenue-enhancing measures, among them the adjustments in the excise taxes on fuel and automobiles and the expansion of the VAT base but keeping exemptions for seniors and persons with disability.
Secretary Carlos Dominguez 3rd of the Department of Finance (DOF) said the decision of the committee to pass tax reforms as a package is a step closer for Congress to help the Duterte administration fund its ambitious agenda to sustain the high-growth momentum, dramatically cut poverty and transform the country into a high middle-income economy by 2022.
The Cua committee, which introduced the first package of the CTRP as House Bill (HB) 4774, also decided to create a Technical Working Group that would draw up a substitute bill consolidating the proposed reforms of the Duterte administration with other tax-related proposals by the lawmakers.
Dominguez said “[c]ongressional action on the first phase of 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 thereby 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,” he added.
For the government to attain its ambitious goal, according to Dominguez, Congress needs to pass the tax reform package that is designed to raise an additional P718 billion for education; P139 billion for health; P267 billion for social protection, welfare and employment; and P1.73 trillion for urban and rural infrastructure.