THE Department of Finance (DOF) Secretary Carlos Dominguez III warned that failure to pass the proposed comprehensive tax reform program in its entirety threatens the government's target of removing a large number of Filipinos from poverty.
Dominguez said President Rodrigo Duterte’s goal of liberating six million Filipinos from poverty by 2022 would be better achieved by implementing these initiatives, because raising productivity and improving competitiveness will, in turn, create more and better jobs—and thereby lift the economic status of the country’s impoverished sectors.
“All the above will not be possible if the tax reform package is not passed,” Dominguez said.
“In a word, the 21.6 percent still trapped in poverty will remain there even after we have gone. We have reached the toughest point in poverty alleviation. We are left with what might be called the hardcore poor: those with no skills and no opportunities. They have the steepest slope to climb,” Dominguez said.
“By failing to act boldly at a most opportune moment, we will betray our people. We will condemn our nation to the vicious cycle of high inflation, high interest rates and inhospitable business conditions that we endured before,” he said.
Dominguez pointed out that: “Without the tax reform package, our GDP growth cannot be sustained by at least 7 percent. Without a dramatic increase in investments, the country will be consigned to growth below 6percent—a purgatory for an emerging economy with great potential.”
“Our economic simulation studies validate this,” he said.
The first package of the comprehensive tax reform program submitted to the Congress last September under the DOF-proposed Tax Reform for Acceleration and Inclusion Act aims to generate a net gain of P174 billion, equivalent to 1 percent of the GDP in 2018.
This initial package aims to make the tax system more progressive through the lowering of personal income tax (PIT) rates to make these at par with those in the region, expanding the Value Added Tax (VAT) base by limiting exemptions to necessities such as raw food, education and health care, while increasing excise taxes on oil and automobiles. (SDR/Sunnex)