DOF to ‘recompute’ poverty-on-tax impact

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THE Department of Finance (DOF) will go over the government’s latest household survey data and poverty statistics to reassess how the latest numbers would impact the tax and welfare estimates under the proposed Comprehensive Tax Reform Program (CTRP).

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In a statement on Wednesday, Finance Secretary Carlos Dominguez 3rd said the DOF will study the 2015 Family Income and Expenditure Survey (FIES) to see if it needs to fine-tune the figures in its CTRP, the first package of which was already submitted to both legislative chambers in September.

“With the 2015 Family Income and Expenditure Survey now available, we will need to recompute all the revenue, economic, equity, and price effects,” Finance Undersecretary Karl Kendrick Chua explained.

The Philippine Statistics Authority showed last week that FIES data pointed to a decline in the poverty rate from 26.3 percent in 2009 to 21.6 percent last year.

Dominguez welcomed the decline in poverty incidence to 21.6 percent, saying this is the cue for the government to “work doubly hard” on its 10-point socioeconomic agenda and hit the target set by President Rodrigo Duterte’s administration of reducing the number of poor Filipinos by 1.5 percent of the population annually over the next six years.

He had said slashing the poverty rate from almost 22 percent to just 13 percent by 2022 remains “doable,” but it would require the Duterte administration to work doubly hard on fleshing out programs of the 10-point socioeconomic agenda that would boost growth and generate enough jobs and livelihood opportunities nationwide as a way to raise incomes for the poor to meet their food and non-food needs.

“At the same time, food prices need to be managed so that it does not eat up income growth” he said.

The DOF chief had also said President Duterte’s poverty-reduction target will entail pursuing with greater vigor the accelerated spending on labor-intensive infrastructure to boost growth as well as on human capital formation like education and health, so poor Filipinos can have better access to quality jobs and livelihood opportunities.

“A drastic reduction in the country’s poverty incidence as envisioned by the President has become more challenging, as this will require improving the living standards of the poorest-of-the-poor families instead of just uplifting the lives of those on the fringes of the poverty line,” he said.

“The government’s focus should be on the countryside as the severely poor are mostly in rural areas,” he added.

The government also needs to frontload initiatives such as reforming the National Food Authority (NFA) with an eye on bringing down rice prices without a corresponding drop in the income of farmers by pursuing rural modernization to raise farmers’ productivity and incomes.

Dominguez pointed out this also means that the government has to pursue tax reforms in the Congress without letup. “So the Duterte administration can generate enough revenues to bankroll both the pro-poor and business-friendly programs of the 10-point socioeconomic agenda on inclusive growth,” he said.

As part of Package One of its comprehensive tax plan, the DOF has proposed to Congress the reduction in personal income taxes that will benefit wage earners and other low-income workers the most, but seeks to offset the projected revenue loss by adjusting excise taxes on petroleum products and automobiles, as well as broadening the value-added tax base by lifting certain exemptions.

However, the DOF said the tax plan provides for highly targeted transfers plus expanded health services to cushion the impact of the proposed adjustment in tax rates on the poorest families as well as other vulnerable sectors like indigent senior citizens and persons with disabilities.

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