The Department of Finance (DoF) on Friday again stressed the need to approve proposed tax reforms given the government’s ambitious “Build Build Build” infrastructure program.
Finance Secretary Carlos Dominguez 3rd, in a video message during an Economic Journalists of the Philippines forum, said the comprehensive tax reform program would serve as a fiscal buffer that would enable the government to pursue an expansionary economic policy.
The first package — the Tax Reform for Acceleration and Inclusion Act (Train) — has already been passed by the House of Representatives. The Senate is currently considering its own version of the bill, which is being held up by differences over proposed tax hikes.
“It is important, to be sure, that the tax reform program be passed as soon as possible. Tax reform will give us the fiscal space to pursue the expansionary measures. Without the additional revenues the reform package will bring, we cannot fully pursue the infrastructure program,” Dominguez said.
The Finance chief has said that failure to pass the TRAIN would be very bad for the government’s infrastructure program, which would have to be drastically reduced.
Seventy-flagship projects have been identified and 18 have already been approved by the National Economic and Development Authority board.
“When the shovels hit the ground, expect an economic growth spurt,” Dominguez said.
Besides ensuring the fiscal space needed for spending on infrastructure and social services, the Finance chief said the government would also have to deal constraints such as the rehabilitation of Marawi City — likely cost P30 billion — and a new law mandating free tuition at state-owned universities.
“I assure you we will not compromise on fiscal discipline and court runaway debts to please populist demands,” he added.
While pursuing tax reform, the government will also continue reforming its main revenue agencies—the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).
As a result of administrative reforms, Dominguez said the BIR posted a 9.32 percent year on year increase in collections from January to July, with the BOC also improving by 11.48 percent.