Finance Secretary Carlos Dominguez III said the government needs to sustain its “economic overdrive” to create enough jobs for the increasing ranks of young Filipinos joining the work force as the country nears its “demographic sweet spot.”
Dominguez said in a forum in Davao City the Duterte government was spending big not only on infrastructure and social protection for the poorest families, but also on education, health and skills training to prime the country’s youth for the challenges of a globally competitive job environment.
“Investment-led growth creates meaningful employment. It draws our younger workers into jobs that require globally competitive skills. It allows us to optimize assets that are scarce such as land. It draws us to our advantages such as a young labor force capable of learning and doing new things,” Dominguez said.
“Our population is nearing a demographic ‘sweet spot’ where millions of young Filipinos will be joining the workforce. We need to train them in the high skills required for a 21st century economy,” he said.
He said the government should spearhead efforts to make growth investment-led, rather than consumption-led to fulfill President Duterte’s pledge of sustaining high growth and making it truly inclusive, especially for those at society’s fringes.
The Duterte administration’s unmatched spending on three areas”•infrastructure, human capital development and social protection”•would help realize its inclusive-growth agenda and reduce the rate of poverty incidence from the current 22 percent to 14 percent by 2022, he said.
“To produce investment-led growth, however, we need to rapidly upgrade our infrastructure. After many years, of spending less than our neighbors for quality infra, we now face a huge backlog that this administration aspires to close in the medium term,” Dominguez said.
He said to achieve that, “the government must be armed with ample revenues to do a groundbreaking public investments program. This is where the Finance Department comes in and where its role becomes absolutely critical.”
Dominguez said that to collect enough revenues needed for the unprecedented public investments program, the government should institute reforms not only in tax administration but also in tax policy.
The first package under the comprehensive tax reform program fulfills President Duterte’s campaign pledge to cut personal income tax rates, Dominguez said. “We are going to do that not only because it was a campaign promise but, more important, because it makes good economic sense.” The succeeding package under the CTRP aims to lower corporate income tax rates, he said.
“We cannot hope to attract investment flows into our economy if our tax rates are substantially higher than in neighboring economies. We seek to bring income taxes from the top rate of 32 percent to a more reasonable 25 percent,” he said.