Econ experts laud tax reform plan
MANILA, Philippines — The Foundation for Economic Freedom (FEF) has expressed support for the tax reform program being pushed by the Department of Finance, saying this will lead to better lives for Filipinos.
“The comprehensive tax reform program lays a solid foundation for the government’s vision of inclusive growth, improved public services and improved purchasing power among consumers,” the group of economic experts said.
“We believe that this program will translate to a more comfortable life for all Filipinos along with safe, healthy and peaceful communities across the country,” the advocacy group added.
FEF said fiscal stability, sustained funding for government programs and investment-friendly tax policies can help the Duterte administration achieve its growth target of at least seven percent annually, reduce poverty from 21.6 percent to around 13-15 percent and significantly reduce unemployment over the next six years.
It added that the entire tax reform package can help raise the additional P1 trillion needed annually to fund investments in infrastructure, education, health, social protection, training, and research and development.
FEF also lauded the design and various components of the proposed tax reform program, noting it addresses the identified problems in the current tax system.
Among these problems are the narrow tax base; complex collection policies with numerous leakages; cumbersome and costly exemptions with debatable benefits; inequitable taxation of salaried workers; uncompetitive rates vis-a-vis the country’s peers; and tax policies that are prone to gaming, evasion and corruption.
“We particularly support the downward adjustments in the personal income tax on the grounds of fairness. We also strongly back the reduction in the corporate income taxes, which will promote and attract more investments and facilitate job creation,” FEF said.
The government earlier said the tax reform program will help raise funds for its Build Build Build program.
Based on estimates by the National Economic and Development Authority (NEDA), the Build Build Build program is expected to generate 106,824 additional jobs this year; 823,696 jobs in 2018; 1,115,999 jobs in 2019; 1,228,964 jobs in 2020; 1,399,463 jobs in 2021; and 1,705,021 jobs in 2022.
The group said it supports the key revenue-enhancing measures and proposals for incremental revenues for public investments of the tax reform program.
Among these measures are the increase in fuel taxes; the rationalization and reduction in fiscal incentives; the selective lifting of bank secrecy laws with respect to fraud; and the expansion in the VAT base (including lifting of exemptions on cooperatives, low-cost housing, renewable energy, and for senior citizens except medicine).
“We fully support the tax reform originally proposed by DOF, and appeal to senators not to unduly dilute its provisions as this would impair the country’s infrastructure spending and fiscal sustainability,” FEF said.
Moreover, FEF said this targeted revenue hike will temper the impact of anticipated higher interest rates due to global market developments.
“We believe that the comprehensive tax reform program will allow every Filipino an equitable opportunity to contribute to a sustained and truly inclusive economic growth,” the group added.
