Secretary Carlos Dominguez III has ordered Department of Finance (DOF) officials to study ways of actively engaging lawmakers in the incoming Congress to speed up the approval of the rest of the Duterte administration’s tax reform packages, as well as to apprise them of the untenability and adverse financial repercussions of certain legislative proposals.
In a recent DOF Executive Committee (Execom) meeting, Dominguez also listed the Department’s priorities when a new set of lawmakers assumes office in the 18th Congress, which opens on July 22.
These legislative priorities, he said, include increasing tax collections by, among others, collecting the right amount of taxes from Philippine offshore gaming operators (POGOs) and their foreign employees; ensuring that the Bureau of the Treasury is functioning well; privatizing idle state assets; collecting unpaid obligations due the Power Sector Assets and Liabilities Management Corp. (PSALM); and further increasing the dividend contributions of government-owned and -controlled corporations (GOCCs).
Dominguez also instructed DOF officials to accelerate the full implementation of the Customs Modernization and Tariff Act (CMTA) and the fuel marking program, and to assist in the proper implementation of the rice tariffication law.
“We have to improve our engagement with the legislature, and we have to get it more organized. We have to get our tax reform packages passed by the end of this year,” Dominguez said during the Execom meeting.
The rest of the tax reform packages include Package 2, which aims to lower the corporate income tax (CIT) and modernize the fiscal incentives regie; Package 3, which institutes reforms in the property valuation system; and Package 4, which rationalizes capital income taxation.
Increasing the excise taxes on tobacco and alcohol products is among the components of Package 2 Plus, which was approved recently by the outgoing Congress. The other component is the bill that seeks to increase the government’s share from mining operations.
Dominguez also said finance officials should also fully explain to legislators why some bills, particularly those that aim to grant tax exemptions and other perks would prove to be ill-advised and fiscally unwise in the long run.
He also directed officials to study the feasibility of liberalizing imports of certain agricultural products such as sugar; the government’s plan to buy the stake of the Philippine Stock Exchange (PSE) in the Philippine Dealing System Holdings Corporation (PDSHC); the privatization of the United Coconut Planters Bank (UCPB); strengthening disaster-risk financing programs to help communities become climate-resilient; the future of the Al-Amanah Bank under a new Bangsamoro region; and the transfer of the Credit Information Corp. (CIC) to the Bangko Sentral ng Pilipinas (BSP).
Finance Undersecretary and Chief Economist Gil Beltran also cited the Warehouse Receipts Bill as another priority measure to help expand the access of farmers to credit and improve the ease of doing business in the rural sector, while Assistant Secretary Antonio Lambino II mentioned the completion and full implementation of the National Single Window (NSW) to facilitate trading and speed up the processing of regulatory requirements here and with the country’s neighbors in the region.
Earlier, Dominguez expressed the hope that S&P Global’s recent upgrade of the Philippines’ credit rating to the higher investment grade of ‘BBB+’ would convince lawmakers to pass the bill that aims to reform corporate taxation as well as the rest of the Duterte administration’s proposed tax reform packages, considering that these are among the factors cited by the debt watcher necessary for the country to secure an ‘A’ rating over the next two years.
He also pointed out that the congressional approval of the first package of the comprehensive tax reform program (CTRP)–the Tax Reform for Acceleration and Inclusion (TRAIN) Law–was cited by S&P as among the key strengths that led it to raise the Philippines’ long-term sovereign credit rating from “BBB” to “BBB+” with a “stable” outlook, which is just a step away from an ‘A’ rating that is accorded only to the most stable economies.
Dominguez said he hopes lawmakers would also acknowledge the tangible benefits of a credit rating upgrade for the country, which, as National Treasurer Rosalia De Leon had pointed out, would, among others, save the government roughly P3 billion in interest payments on its debt securities issued earlier this year. DoF