Duterte backs tax reform program – DoF


President Rodrigo Duterte has given his full backing to the Comprehensive Tax Reform Program (CTRP), which is supposed to play a pivotal role in his administration’s ambitious agenda to sharply reduce poverty, achieve economic inclusion and catapult the country to an upper middle-income economy by the time he steps down from office in 2022.

“The President has already held three meetings with leaders of the Congress, and the basic subject of those meetings was the tax reforms,” Finance Secretary Carlos Dominguez 3rd.Dominguez was quoted as saying at a recent forum in Makati City.

“And he has indicated his strong support for the tax reform program,” the Cabinet official said.

Dominguez was referring to the Comprehensive Tax Reform Program (CTRP), the first package of which was filed as House Bill (HB) 4774 in the House of Representatives on January 17 by Representative Dakila Carlo Cua, who chairs the House committee on ways and means that handles all revenue-related measures.

Asked during the forum if the Chief Executive would put his political capital behind this tax reform plan, Dominguez replied: “Definitely, President Duterte is willing, as you put it, to spend his political capital on this.”

As for the record official development assistance (ODA) the President managed to secure within his first six months in office, Dominguez said that although the new government was indeed able to raise about P900 billion from China and Japan, the amount wouldn’t be enough to fund the administration’s massive fiscal spending strategy, which would actually cost an estimated P8 trillion over the President’s six-year term.

Addressing the claim that the government need not impose new taxes or increase existing ones in light of the ODA funds secured by the administration, Dominguez said: “Well, quite frankly, we’ve raised a total of something like P800 billion or P900 billion, and that will be spent over let’s say six years, right? Certainly, that’s not enough to cover the P8-trillion program that we need to spend on.”

“So we have to somehow pay for it, and the only way to pay for it is to have a tax reform program,” said Dominguez.

The CTRP proposes sizable cuts in the personal income tax (PIT) rates of low- and middle-income taxpayers along with revenue-offsetting measures, including broadening the value-added tax (VAT) base and raising oil and automobile excise taxes that have not changed in 20 years.

With the country’s gross domestic product (GDP) expanding by a high 6.8 percent in 2016, Dominguez said there is more reason for the DOF to aggressively engage in its proposed CTRP, and the Congress to swiftly act on it, so the Duterte administration could raise enough funds for its unparalleled spending program on infrastructure, human capital and social protection that would keep the Philippines among Asia’s fastest-growing economies in the years ahead.

He said the CTRP is integral into the administration’s high and inclusive growth strategy because “it needs to raise an extra P1.07 trillion till 2022 to close the infrastructure gap that has for long dulled the country’s competitiveness as an investment destination.

The administration, according to the Finance department, also intends to spend more on education, health and skills training to improve living standards and widen access to high-paying quality jobs. Part of its spending program also focuses on social protection to cushion the initial impact of reforms on the poor and other vulnerable sectors.


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