Tax reform bill gets backing from former economic officials

Former finance secretaries and heads of the National Eco­nomic Development Authority (Neda) strongly supported and pushed for the approval of the Tax Reform for Acceleration and Inclusion (Train) bill, which seeks to legislate fiscal reforms that the Duterte administration had sought to achieve its vision of inclusive growth.

The newly crafted fiscal reform package contained in House Bill 4688, authored by Albay Rep. Joey Salceda, pri­marily aims to “create a tax sys­tem that is simpler, fairer and more efficient, characterized by low rates and a broad base promoting investment, job cre­ation and poverty reduction”.

Salceda filed the bill in Sep­tember last year and is set as a “first priority” legislation by the House ways and means com­mittee, when regular Congress session resumes. The country’s current tax rates are based on the 20-year-old National Inter­nal Revenue Code, which has not been substantially modified since 1997.

Train, as presented by Sal­ceda, aims to “ultimately reduce poverty to single digit, grow the economy by 9 percent, and transform the Philippines into an Asian economic power­house by 2028, with USD1.2 trillion Gross Domestic Prod­uct (GDP). It will then qualify the country for membership in the Organization for Economic Cooperation and Development (OECD).” When enacted into law, Train will be implemented by the Department of Finance (DOF).

The Foundation for Eco­nomic Freedom (FEF), com­posed of ex-officials from the Department of Finance (DoF) and five former heads of Neda, in a recently published state­ment, endorsed the reform pro­posals, which they said, intend to “put more money in people’s pockets, encourage investment, ultimately leading to the eradi­cation of extreme poverty.”

The FEF, an advocacy group for good economic gov­ernance and market-friendly reforms, also commended the DoF and Duterte’s econom­ic team for “crafting a for­ward-looking fiscal program for legislation.”

The FEF said the “pro­posed legislative program cre­ates a solid foundation for the government’s vision of inclu­sive growth, improved public services and improved purchas­ing power among consumers.”

The statement was joint­ly signed by FEF advisers and members including former Prime Minister and DoF Sec­retaries Cesar E. A. Virata, Jose Isidro N. Camacho, Jesus P. Es­tanislao, Roberto F. de Ocampo, Jose T. Pardo, Cesar V. Purisima, and Juanita D. Amatong; former Neda Directors-General Ar­senio M. Balisacan, Emmanuel F. Esguerra, Cielito F. Habito, Felipe M. Medalla, and Romulo L. Neri; and ex-DoF Under­secretaries Joel A. Bañares, Ro­meo L. Bernardo, Cornelio C. Gison, Lily K. Gruba, Milwida M. Guevara, Jose Emmanuel P. Reverente, and G. Florencia Tarriela.

They said the “structur­al weaknesses of the outdated tax system make our econo­my less competitive relative to our neighbors and deprive our people of deeply needed invest­ments to improve their lives.”

“We believe this program will translate to a more com­ fortable life for all Filipinos along with safe, healthy, and peaceful communities all over the country. We have studied the proposed tax policy reform program, which is the subject of public consultations, and found it to be integral to the attainment of said vision. It is also aligned with the ten-point socio-economic program ad­opted by the government,” they added.

The statement stressed that “the proposed comprehensive tax reform is progressive, timely, and well-crafted to achieve the vision of a prosperous Philip­pines free of poverty. For these reasons we strongly support the reform and urge the public to do the same.”

In one of his newspaper columns in September last year, former Socio-economic Plan­ning Secretary Gerardo Sicat said the tax reform program is comprehensive and contains different cohesive parts that help to produce a larger rev­enue to finance government development programs while realigning also the tax burden across income classes in sup­port of national development.

“The overall gains in tax efforts that such reforms hope are expected to bring in an ad­ditional three percent of GDP. In terms of actual revenues, by the year 2019, this will mean around P600 billion of new revenues.Two-thirds of these revenues (P400 billion) will come from the tax reform program, while the rest (P200 billion) from the administra­tive reforms,” Sicat said.

“If this bold reform pro­gram gets approved, the goal of achieving sustained growth would be near in sight, provid­ed he (Duterte) sticks to the goal of achieving the 10-point economic program – which of course represents another test of will. Any failure to pass the important components of this program or to scale it down in terms of revenue produc­tiveness could cause either a reduction in goals or, if con­tinued, could induce more inflationary pressures as more budgeted expenditure by the government is under­taken,” he added.

Salceda said Train runs parallel with President Dute­rte’s “Tunay na Pagbaba­go” or real positive change commitment to the Filipino people, that includes more inclusive growth and com­fortable life for all, improved public services, more and better jobs and more money in the people’s pockets; and safe, healthy, and peaceful communities.