The Philippines, under a fast-integrating regional economy, is well positioned to address the needs of the other member-states of the Association of Southeast Asian Nations (Asean), but should catch up with its neighbors in addressing the country’s weak infrastructure backbone to capitalize on the massive opportunity that will create hundreds of thousands of jobs for Filipinos, according to the Department of Finance (DoF).
“We are positioned very well in Asean to address the needs of Asia. However, we cannot achieve our full potential because we cannot even move our goods properly within our own country. So it’s very important for us to focus on the infrastructure that delivers good logistics in the Philippines,” Finance Secretary Carlos Dominguez 3rd said at the recent “DuterteNomics” forum in Manila.
He underscored the need to have Congress pass the Comprehensive Tax Reform Program (CTRP) so the government may jumpstart its ambitious infrastructure program.
The first package of the CTRP, now pending in the Congress, will serve as the “cornerstone” of funding the government’s infrastructure program, which will require P8.4 trillion over the next six years.
The first package of the CTRP aims to lower personal income tax rates, alongside reforming the excise tax system for fuel and automobiles, and expand the value-added tax base while retaining exemptions for seniors and persons with disabilities, among other measures. It yet to be approved at the committee level in the House of Representatives.
“Essentially, [the infra buildup]will be financed really in three ways. The first is it will be financed by our taxes, that’s why we have to put up our tax reform program, that’s why we have to get it passed. That is the cornerstone of the financing of this program. Secondly, we will utilize ODA (official development assistance) funds. And third, of course, we will utilize commercial loans,” said Dominguez.
If the CTRP fails to hurdle Congress, the government will have to cut its infrastructure projects.
Before the Lenten break, the House Ways and Means Committee chaired by Dakila Carlo Cua agreed in principle to tackle the bill as a package, which puts to rest concerns that the Congress might abandon the revenue-generating measures of the proposal and only pass the revenue-eroding portion lowering income tax rates.
Malacañang’s plan to accelerate spending on infrastructure and on human capital by upgrading the country’s educational and health care systems, along with its goal to lower income tax rates to sharpen the Philippines’ global competitiveness, would require additional revenue measures that could only be generated via the CTRP, Dominguez noted.
Now is the time to move decisively in carrying out this “grand effort,” Dominguez said, given the convergence of positive factors that are conducive to high and inclusive growth, such as the economy’s low-interest rate regime, excess liquidity, benign oil prices, investment-grade credit rating, a young, vigorous work force and the strong support of countries like Japan and China.