FINANCE Secretary Carlos Dominguez III said much will be lost if the government fails to seize the opportunity of changing the taxation system in the country through the comprehensive tax reform program.
“This is the tax package that will enable us to reshape our economic growth to make it more inclusive. It is the tax reform package that will bring us to the irreversible path towards being a high-income economy in one generation and bring down our poverty rate to a mere 14 percent by 2022,” Dominguez said at the hearing of the House ways and means committee on the proposed Comprehensive Tax Reform Program on Monday.
“If we fail to raise the volume of revenues required for our economy to break out over the next few years, we will fail in everything else. We will fail to close the infra gap. We will fail to make the investments in our young to prepare them for meaningful economic participation,” he said.
“We will fail to catch up with our neighbors in the region who have invested twice of the amount than what we did on infra over the past three decades. Most important, we will fail to bring down the level of poverty afflicting our people.”
He said the Philippine tax system was direly in need of reform, as personal and income tax rates here were much higher than the rest of the region. He said there was a need to bring them at par to be competitive for investments, adding that unjustly high tax rates were nearly an invitation for evasion.
He added lowering the tax rates would attract even more foreign investments to sustain a higher growth rate. Unless the government seizes the moment and mounts an unmatched infrastructure program that would make the economy far more competitive, favorable economic trends sweeping the region would once again bypass the Philippines, he said.
“This is our economy’s golden moment. If we fail to seize it, the conjuncture of opportunities will pass us and we will betray our people. We cannot afford to lose because of indecision or because we failed to act boldly,” he said.
The proposed CTRP will allow the government to build or improve 44,000 kilometers of national and local roads, construct more local hospitals and improve existing ones, attain 100 percent PhilHealth coverage, and achieve the ideal teacher-to-student and student-to-classroom ratios for the benefit of the country’s future workforce.
Moreover, some P48 billion will be earmarked for targeted transfer programs for low-income groups and other vulnerable sectors to shield them from the initial impact of the CTRP.
The first package of the CTRP aims to lower personal income tax rates for 99 percent of the country’s taxpayers while expanding the value-added tax base and adjusting rates for consumption taxes, such as the excise tax on petroleum products and automobiles.