‘Consider PH credit standing in okaying tax reforms’

Lawmakers should consider the country’s latest credit rating standing in approving the remaining tax reform proposals of the government, Finance Secretary Carlos Dominguez 3rd said.

“I hope that, with this credit rating upgrade recently, the Senate will really consider passing these bills that will redound to the benefit of the Filipino people,” Dominguez was quoted in a Department of Finance statement on Friday.

In late April, S&P Global Ratings raised the country’s credit rating from “BBB” to “BBB+” and assigned a stable outlook. It said the Philippines could expect another upgrade over the next two years if the government makes significant gains in its fiscal reform program or if the country’s external position improves such that its status as a net external creditor becomes more secure over the long term.

Dominguez pointed out that congressional approval of the first Comprehensive Tax Reform Program (CTRP) package — Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (Train) Act, implemented at the start of 2018 — was cited by S&P as among the key strengths that led it to assign the country’s highest investment grade ever, which is just a step away from an ‘A’ rating that is accorded only to the world’s most stable economies.

“What S&P really is saying (in its report) is this is the roadmap to a second upgrade. It’s right there, all you have to do is follow it: Complete the tax reform program; sustain the deficit at 3 percent, don’t increase it in other words; lower your debt-to-GDP (gross domestic product) ratio. It’s all there,” he said.

Aside from reforms in corporate taxation, which cover the reduction of the current corporate income tax rate of 30 percent — the highest in the region — and the rationalization of fiscal incentives, the Finance department is also urging Congress to pass bills that further raise excise taxes on tobacco and alcohol; increase the government’s share from mining operations; lift bank secrecy laws and ensure the automatic exchange of tax information; reforming the property valuation system of local governments; and rationalizing capital income taxation.

“I want a big push on this” in the Congress, Dominguez said in reference to the rest of the CTRP bills pending in both chambers.