FINANCE Secretary Carlos Dominguez III said Monday the passage into law of the proposed Comprehensive Tax Reform Program under the Duterte administration will create a strong buffer to shield the Philippine economy from the wave of protectionism sweeping across the globe.
Speaking at the resumption of a hearing conducted by the House ways and means committee, Dominguez said unless the tax reform bill endorsed by the Department of Finance was passed soon enough, millions of the country’s “hardcore poor, those with no skills and no opportunities” would remain trapped in the cycle of poverty.
“Given the uncertainty created by resurgent protectionism, we are likely to see volatility and risk-aversion among many of our trading partners. Slowing global trade translates into weaker global growth, Dominguez said at the hearing of the panel chaired by Rep. Dakila Carlo Cua.
“We should seize the ‘Cinderella moment’ we now have to quickly move the fiscal reform package and create a buffer for the most vulnerable among our people,” the finance chief said.
Cua is author of House Bill No. 4774, which contains the CTRP’s first package that aims to make the tax system more progressive by lowering the personal income tax rates to make them at on par with those of other economies in the region, expanding the value added tax base and adjusting the excise taxes on oil and automobiles.
Dominguez assured the House committee that most cars “will still be affordable” under the CTRP, while the more expensive ones would be slapped with higher excise taxes to “ensure progressivity” of the proposed tax system.
“We are at a critical juncture today. The easier path is to continue with existing policies that might bring high growth but will also sadly maintain high poverty and economic exclusion. The more challenging path is to reform the fiscal and economic policies so that growth happens with equity,” he said.
Dominguez said the government must draw up a tax reform program that would enable the government to raise an additional P718 billion for education, P139 billion for health, P267 billion for social protection, welfare and employment, and P1.73 trillion for urban and rural infrastructure.
“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.
“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 6 percent—a purgatory for an emerging economy with great potential.”