MANILA-- Economic managers on Tuesday pushed for the passage of the Tax Reform for Acceleration and Inclusion Act (TRAIN) to complement the proposed PHP3.767 trillion national budget for 2018 and sustain the fiscal position of the government.
Members of the Development Budget Coordination Committee (DBCC) -- composed of Budget Secretary Benjamin Diokno, Socioeconomic Planning Secretary Ernesto Pernia, Finance Secretary Carlos Dominguez, and Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. -- gave lawmakers at the House of Representatives a briefing on the 2018 budget.
The proposed budget for next year is 12.4 percent higher than the PHP3.35 trillion 2017 budget and represents 21.6 percent of the gross domestic product (GDP).
Diokno said the implementation of the tax reform bill, paired up with an aggressive expenditure program through a higher deficit target, could shore up additional government revenues ranging from 1.8 percent to 2.1 percent of the gross domestic product (GDP).
"With the implementation of CTRP in 2018, [government] revenues are projected to increase to PHP2.84 trillion which is equivalent to 17 percent of the GDP and gradually increase to PHP4.5 trillion by 2022 or 17.8 percent of the GDP," Diokno said.
Dominguez, for his part, stressed the need to reconfigure the tax system to make Philippine communities safer and the society fairer for future generations.
Dominguez said the passage of the tax reform bill aims to make the land market efficient and create more investment and jobs."
"As approved by the house last May 31 the CTRP proposes a tax system that exempts those with a taxable income of below PHP250,000 a year while the rest of the tax payers will also see lower rates except those who are very rich or earning PHP5 million a year," Dominguez said.
"Apart from lowering income taxes we also want to make sure that the microenterprises will not be burdened, currently they have to pay income tax and follow the tax requirements of large corporations," he added.
Apart from the DBCC, the Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives highlighted the importance of the CTRP's passage, noting that a big chunk of the 2018 budget is expected to come from the CTRP.
"The bulk or 94 percent of the projected total revenues of PHP2.84 trillion will come from tax revenues, of which three-fourths will be accounted for by the Bureau of Internal Revenue," the CPBRD.
The CPBRD said additional cash transfers, public transport and other subsidies are provided for under the proposed 2018 budget to mitigate any potential adverse impact of the tax reform.
The body also argued that the non-passage of the TRAIN bill could compromise the fiscal position of the government, and could lead to increased borrowing to finance the budget gap.
In a separate interview, House Committee on Appropriations Chairman Karlo Alexei Nograles said the 2018 budget actually takes into consideration that the TRAIN is already passed (into law) by 2018."
"It will definitely be a challenge if the TRAIN is not passed. Economic managers will have to be creative in finding ways on how to collect PHP134 billion that will be derived from the first tax package," Nograles said.
Nograles ponted out that the funds allocated for the projects and programs in the budget book should not be stalled despite the delay in passage of the tax reform bill.
"The important thing is the projects and programs must continue in the budget book," he said.
In May, the lower chamber approved on third and final reading the TRAIN bill with 246 votes in the affirmative, nine negative, and one abstention.
Under the tax reform bill, workers earning no more than PHP250,000 annually will be exempted from paying personal income taxes.
To compensate for the revenue losses from the lowering of the PIT rates, some of the offsetting measures include increasing excise tax rates on all petroleum products and automobiles; expanding the value added tax (VAT) base; introducing excise tax on sugar-sweetened beverages; and improving tax administration measures.
The revenues shall also be allocated for infrastructure, health, education and social protection expenditures.
Source: Philippine News Agency