LOOKING to avoid the passage of legislation that could unduly upset the fiscal balance and the resulting veto of such, the Department of Finance (DOF) has proposed weekly meetings between the economic team of the Duterte administration and Congress leaders.
In a statement on Thursday, Finance Secretary Carlos G. Dominguez III said the weekly meetings will enable the Executive and Legislative branches to thoroughly discuss and move ahead on urgent measures to benefit the people in the second half of the Duterte presidency.
“I propose that the economic team and Congress engage more frequently so that we can mutually move forward with legislation that truly contributes to the common good. In this direction, the DOF is already reorganizing to assign more full-time directors and staff to engage with Congress on a weekly basis,” Dominguez said.
More frequent engagements, he said, will prevent bills approved by Congress from being vetoed by the President for going beyond the limits of fiscal discipline strictly observed by the Duterte administration to fulfill its goal of high, sustainable and inclusive growth.
“These vetoes do not mean that we do not support you. The President’s vetoes invite us to take another approach,” he added, openly addressing the members of Congress.
To maintain fiscal discipline, Dominguez said, Duterte had to veto some bills approved by the 17th Congress, a move that actually helped the Philippines secure a higher investment-grade credit rating of “BBB+” from Standard & Poor’s (S&P) Global on April 30.
In the 17th Congress, 147 bills proposed by lawmakers were seen to either erode revenues by P178 billion or mandatorily add P799 billion to the budget, with an additional 31 bills seeking to create more economic zones.
According to the DOF, the country already has 546 of these tax-free areas as of 2017, all contributing to massive leakages in revenue collection.
“We do not think this is how we should do policy—that is, create more tax-free zones or sectors, and ask other Filipinos to pay for these incentives. Surely there is a better way to help everyone,” he said.
Dominguez explained that fiscal discipline guarantees not only prudent state spending, but also ensures the government has enough resources so that new measures do not take away money from millions of poor Filipinos who also need help through existing programs.
He pointed out, though, that laws such as the Tax Reform for Acceleration and Inclusion Act (TRAIN), the first package of the Duterte administration’s comprehensive tax reform program (CTRP); and the Rice Liberalization Law, which imposes tariffs on rice imports in lieu of quantitative restrictions (QRs), will be the 17th Congress’s lasting legacy to the Filipino people.
“You did what is right so that we can provide every Filipino the means to live a better life. I have no doubt that generations of Filipinos will thank you deeply, Dominguez said as he cited the outgoing Congress as “among the most productive and hardworking that I have ever seen.”
18th Congress agenda
For this year, the DOF is pushing the approval of the rest of the measures under the CTRP, especially Package 2, which aims to reduce the corporate income tax (CIT) rate to put it on a par with the regional average, and rationalize fiscal incentives to make these specifically targeted, time-bound, performance-based and transparent.
Members of the Duterte administration’s economic team include the DOF, the Department of Budget and Management, the Bangko Sentral ng Pilipinas, and the National Economic and Development Authority (Neda).
The 18th Congress will start session on July 22, 2019, in time for the President’s State of the Nation Address.