Policy shift on government projects bared: Service, not profit

Infrastructure would be treated as “public goods, not commodities for profit,” Finance Secretary Carlos Dominguez III has said, revealing a policy shift in the Duterte administration to push projects that proved to ne sluggish in the previous administration. 

Dominguez said hundreds of infrastructure projects would have to be started to accelerate economic growth by reversing the previous administration’s underspending and by spurring investment.

Budget Secretary Benjamin Diokno earlier said infrastructure spending’s share of gross domestic product (GDP) would be raised to 7 percent this year, higher than the 5-percent target set by the previous Aquino administration. The increase is expected to hit an economic-growth target of 7 to 8 percent a year in the next six years and bring the poverty rate down to 17 percent by 2022, from 26 percent at present.

Earlier, Diokno said the Aquino administration underspent its budget during its six-year term by P1 trillion. He did not day where the money went.

Aquino initiated a public-private partnership (PPP) program at the start of his term that identified flagship infrastructure. But lack of interest among private investors led to the awarding of only 12 out of the nearly 50 projects planned.

Dominguez said the PPP program will be revamped to speed up procurement primarily by doing away with the need for “multiple Cabinet approvals.”

The principle of the previous administration to realize huge revenues from the PPPs also stalled most of the contracts, he said.

“There has to be a better way of doing this,” Dominguez added during his keynote speech at the recent Financial Times-First Metro Philippines Investment Summit in Makati City.

“I am asking my staff to look into more innovative ways of doing this, bearing in mind that infrastructure are also public goods and not just commodities that enable the government to earn,” he said, adding: “It is always tempting for the government to think about its bottom line and forget about the public needs.”

Dominguez said the government’s bid to secure funds for its programs would be backed by strengthened efforts of broadening the tax base and by property collecting from large taxpayers.

He said the economic managers were reviewing the country’s tax base and were targeting a P1-million all-in income tax for large taxpayers.

Dominguez said the focus of the Bureau of Internal Revenue (BIR) would be to collect from large taxpayers because he does not believe that the current number based on the BIR’s Large Taxpayer Service (LTS) was only about 2,800 individuals and companies.

“We are going to put more effort in tax collections and the biggest yields you get are in relatively large taxpayers. I can’t see why there are only 2,800. It should be more than that. The BIR should expand that number,” he said.

Dominguez said the tax base in the country was created in 1997 and this no longer applies at the present time.

He said the maximum tax exemption based on the current law is only P500,000 and this needs to be adjusted and pegged against inflation.

“We have not come up with the exact tax tables because we are still consulting the various members of the legislature,” he said.

Dominguez said the strengthened tax-collection efforts would be “aggressive” but not to the point of shaming people, similar to the government’s anti-illegal drugs campaign.

“I hope that taxpayers do not require us to make it that aggressive. We expect more compliance. And we will be very happy if they just cough up the money that they owe us,” he added.

Dominguez said the current tax system “could hardly be called sustainable,” adding, it is “not progressive” since “it relies on collection from less and less people.”

He said 98.47 percent of tax collections come from voluntary tax compliance and only about 3 to 5 percent come from audit and enforcement activities.

He said the government plans to expand the electronic filing saturation of the BIR from the current 62.5 percent, the large taxpayer service (LTS) and the taxpayer segmentation.

Dominguez also said there was an urgent need to rationalize the issuance of import permits because the imposition of too many requirements for these slows the flow of trade and unnecessarily burdens local business operations.

”Most of what ails the Bureau of Customs is self-inflicted. The sooner we address the problem of ‘flawed corporate culture’ at the bureau, the better off we will be,” he said.

Dominguez said he had proposed the conduct of new processes in ports other than the Port of Manila to address crowding in this particular port.

Also part of the reform program is the improvement of the organizational capacity of both the BIR and the BOC through exemptions from the salary standardization law (SSL), increased fiscal autonomy, relaxing bank-secrecy laws and making tax evasion a predicate crime to money laundering. LUIS LEONCIO 

Policy shift on govt projects bared: Service, not profit