The government’s program to ramp up investments in infrastructure will not only improve connectivity and boost economic productivity in the countryside, but also develop the emergency response system that will better protect communities.
Public Works Secretary Mark Villar said infrastructure plays a key role in mitigating the effects of natural disasters and man-made conflicts as shown by the lessons learned during the onslaught of super typhoon Yolanda and the Zamboanga City siege in 2013.
“In these separate cases, the presence of alternative gateways to city centers, which require intermodal transport systems could have saved more lives and mitigated the effects of these crises on the affected communities,” Villar said.
Infrastructure is also indispensable to a robust economy in the regions. Villar pointed out the need to build a direct road link between the Caraga region and Bukidnon to enhance trade in Mindanao.
“Improving connectivity in the regions through physical infrastructure is necessary not only to realize the government’s goal of inclusive growth, but also to boost our emergency response systems and reduce our vulnerability to disasters, whether natural or man-made,” he said.
“Moreover, gaps in infrastructure that deliver basic services exist and need to be funded. For instance, in the area of solid waste management, only 30 percent of the 42,028 barangays nationwide have materials recovery facilities,” Villar noted.
The Development Budget Coordination Committee (DBCC) has also stressed the need to improve the country’s disaster preparedness to avoid “hindrances” to the economy’s continuous high growth rate.
According to a statement released by the DBCC, “government revenues are expected to reach P2.913 trillion in 2018 once the tax reform package (submitted by the Department of Finance to the Congress) is passed.”
“The projected proceeds of the tax reform package – around P206.8 billion under Package 1– will fund the government’s big-ticket development projects, particularly the infrastructure program,” the DBCC said.
To sustain growth, National Economic and Development Authority (NEDA) Director General Ernesto Pernia said government should remain vigilant of external risks such as Japan’s fragile expansion, the slowdown of China’s economy, and a possible revival of protectionist policies in the United States and Europe.
“The country must intensify its disaster preparedness measures as well as the logistics and infrastructure project coordination to avoid hindrances,” Pernia said.
Budget Secretary Benjamin Diokno said the infrastructure budget will grow from P861 billion in 2017 to P1.898 trillion by 2022, or from 5.4 to around 7.0 percent of GDP.
“These record levels of spending will align our country with its more vibrant neighbors and put us on track to achieve our vision of eradicating extreme poverty and transforming our economy into a high-income one by 2040,” Diokno said.
“This can only be done by implementing broad and deep reforms in tax policy and administration through the enactment of the Department of Finance (DOF)-proposed Comprehensive Tax Reform Program (CTRP) now pending in Congress,” he noted.
Finance Secretary Carlos Dominguez 3rd said the DOF welcomes the recent statement of Rep. Dakila Carlo Cua, chairman of the House ways and means committee, that the first package will be approved this month.
In the medium-term, Dominguez said tax reform is expected to help reduce the poverty rate from 21.6 percent in 2015 to 14 percent in 2022, lifting some six million Filipinos out of poverty, and helping the country achieve upper middle income country status where per capita gross national income increases from $3,550 in 2015 to at least $4,100 by 2022, which is where China and Thailand are today.
If this momentum is sustained, the country will be well on its way to becoming a high-income economy by 2040 with a per capita gross national income of at least $12,000.
Package One of the CTRP proposes to lower personal income tax rates, broaden the Value Added Tax (VAT) base, and increase the excise taxes on oil products and automobiles.
The lowering of personal income tax rates will increase the take-home pay of workers, Dominguez said.
A broader VAT base will level the playing field and reduce massive leakages, while higher excise taxes on oil products and automobiles will improve the progressivity of the tax system as richer households consume far more of these products, he said.
“For instance, the top 10 percent of households consume around 50 percent of oil products (per 2015 FIES). Higher excise taxes can also help address traffic congestion and pollution,” Dominguez noted.
“Meanwhile, to protect the poor and vulnerable sectors, highly targeted transfers and subsidies will be provided as part of the ramp up of social spending from 37.3 percent of the 2016 budget to 40.1 percent of the 2017 budget,” he said.