Proceeds from the first phase of the proposed tax reform program should help shield the $292-billion economy from the ill effects of so-called global headwinds anticipated this year by the Development Budget Coordination Committee (DBCC).
For this reason, the Cabinet-level body on Tuesday reiterated the importance of Package 1 of the tax-reform program that it said was needed to help boost the country’s disaster preparedness, and by this measure ensures the country’s continued growth.
“The projected proceeds of the tax-reform package, around P206.8 billion under Package 1, will fund the government’s big-ticket development projects, particularly the infrastructure program,” the DBCC said.
According to the DBCC, revenues from the package were to reach P2.913 trillion in 2018 as the tax-reform program is passed and implemented.
To sustain continued high growth, Socioeconomic Secretary and National Economic and Development Authority Director General Ernesto M. Pernia urged the government to remain vigilant against such external risks as Japan’s fragile expansion, the slowdown of China’s economy, and possible revival of protectionist policies in the United States and Europe.
Budget Secretary Benjamin E. Diokno said the total infrastructure budget for both national and local programs will grow from P861 billion this year to P1.898 trillion by 2022, or from 5.4 percent to some 7 percent of the country’s local output or the GDP.
“These record levels of spending will align our country with its more vibrant neighbors and put us on track to achieve our vision of eradicating extreme poverty and transforming our economy into a high-income one by 2040,” Diokno said.
He quickly added the surge in infrastructure spending will happen only if the government raised a lot more revenues to ensure the financial viability of the ambitious buildup program.
“This can only be done by implementing broad and deep reforms in tax policy and administration through the enactment of the DOF-proposed Comprehensive Tax Reform Program [CTRP] now pending in Congress,” Diokno reiterated.
President Duterte’s ambitious program to ramp up investments in infrastructure is meant to improve connectivity, boost economic productivity in the countryside, and develop the country’s emergency- response system to better protect communities most vulnerable to natural disaster.
Public Works Secretary Mark A. Villar said infrastructure plays a key role in mitigating the effects of natural disasters and man-made conflicts, as shown by the lessons learned during the onslaught of Supertyphoon Yolanda and the Zamboanga City siege in 2013.
“In these separate cases, the presence of alternative gateways to city centers, which require intermodal transport systems, could have saved more lives and mitigated the effects of these crises on the affected communities,” Villar said.
Infrastructure is also indispensable to a robust economy in the regions, especially those farthest from Metro Manila, according to Villar. He pointed out the need to build a direct road link between the Caraga region and Bukidnon to enhance trade in Mindanao.
“Improving connectivity in the regions through physical infrastructure is necessary not only to realize the government’s goal of inclusive growth, but also to boost our emergency-response systems and reduce our vulnerability to disasters, whether natural or man-made,” Villar said.
Moreover, gaps in infrastructure that deliver basic services exist and need to be funded. For instance, in the area of solid-waste management, only 30 percent of the 42,028 barangays nationwide have materials-recovery facilities,” Villar explained.
The first package of the CTRP was submitted to Congress last September. Finance Secretary Carlos G. Dominguez III said he welcomes the recent statement of Rep. Dakila Carlo E. Cua, who chairs the House Ways and Means Committee tackling tax reform, that the first package would be approved within the month.
The first phase of the tax-reform program includes linking the excise tax on fuel to inflation, recast the excise tax on fuel, as well as expand the areas covered by the value-added tax.