By Genalyn D. Kabiling
The government’s infrastructure program may be derailed or the economic growth may be dampened if additional tax reform proposals are not passed into law, President Duterte’s top economic manager warned yesterday.
Finance Secretary Carlos Dominguez III said they intend to present to Congress the second of the five packages of the Comprehensive Tax Reform Program this month to help prevent the budget deficit from ballooning and sustain infrastructure spending.
“Package 1B is crucial to keep the three percent of the GDP deficit target. To meet this target for the rest of the administration, we will need to pass Packages 2 to 5,” Dominguez said.
“No succeeding packages mean either a breach of this deficit which will hurt our economy or a cut in government spending possibly compromising the President’s infrastructure program,” he added.
Duterte had earlier signed into the law the first package of tax reforms, also known as Tax Reform Acceleration and Inclusion Act. The new law lowers personal income tax but imposes higher taxes on petroleum, tobacco, cars, and some sweetened beverages.
Under the second package, the government aims to lower corporate income tax rate to 25 percent from the present 30 percent. It also aims to rationalize fiscal incentives.
“Within this month, we will submit to Congress our proposal for Package 2 which will lower corporate taxes and modernize fiscal incentives,” Dominguez said.
He said Package 4 on passive income and financial taxes will be submitted to Congress by July 2018.
“Package 3 will be submitted within the year and Package 5, we will see if we will still need revenues from Package 5. Some of Package 5 features have already been included in Package 1,” Dominguez added.
Dominguez defended the administration’s TRAIN Act, saying it was the first time the main purpose is to help reduce poverty and inequality, and not deficit and debt reduction.