PASSING the remaining tax reform programs and the bills that would boost the country’s ability to adapt to the “new normal” amid the still-raging Covid-19 pandemic constitute the legislative wishlist of the President’s economic team for both houses of Congress.
In a pre-State of the Nation Address (Sona) forum on Wednesday, Finance Secretary Carlos G. Dominguez III also said specifically, they hope the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which used to be the second package of the tax reform effort of the administration, will be passed.
Dominguez said other bills that seek to improve the tax system such as the simplification of passive income taxes and the modernization of the country’s real estate assessment system are also on their list.
“Our legislative agenda is still, the priority will still be the continuation of the tax reform. We have not gotten our CREATE bill passed, we would like the other bills that are pending with this Congress that we have proposed to be passed as well,” Dominguez said.
Acting Socioeconomic Secretary Karl Kendrick T. Chua said CREATE will help provide more targeted and performance-based incentives.
Chua added that apart from the tax reform programs, the economic team is pushing for the passage of economic bills that seek to improve the country as an investment destination.
The National Economic and Development Authority (Neda) Acting Director General said these include the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act.
“These are in advanced stages in Congress and I think are very important for helping the Philippines attract the necessary innovation in new technology, ideas and investment,” Chua said.
There is also a need to pass a law that would help the country adapt to the “new normal,” he said. This includes bills enhancing the digital economy like the open access data bill.
Dominguez said the economic team is also in discussion with both houses of Congress for the passage of the government’s stimulus package dubbed Bayanihan 2, which aims to support the administration’s pandemic response.
He said these are important efforts to ensure that the Philippines recovers from the impact of the pandemic, which forced widespread lockdowns that shuttered businesses and schools, disrupting most economic activities. He also said the public is as much a part of the recovery efforts as the government, particularly when it comes to boosting the economy.
Dominguez said consumption accounts for as much as 75 percent of the country’s GDP. This means the recovery of household spending is key to growing the economy after this pandemic.
“The big hurdle actually that our economy is facing,” he explained, is reckoning with the impact on consumption, which “is about 70-75 percent of our total GDP. So that has to come in.” The stimulus program is important, Dominguez said, “but essentially we have to provide our countrymen with the confidence that we will actually together overcome this Covid contagion.”
Chua stressed that inflation in the country, despite the recent 2.5-percent increase in prices reported in June, was relatively low and stable and within the Bangko Sentral ng Pilipinas (BSP) target of 2 percent to 4 percent this year.
He said this was largely due to cheaper food prices, particularly rice. Since the government passed the Rice Trade Liberalization (RTL) Law, households have been buying rice at lower prices, Chua added.
The only caveat in inflation, at least in recent months, is the higher cost of transportation. Chua traced the higher prices to the scarcity of transportation services.
“We shouldn’t look at inflation alone and then come to a conclusion that it is increasing or decreasing. I think we should look at inflation more holistically,” Chua said. “In general, the inflation is low and stable and is actually helping a lot of the people cope with this crisis.”
Earlier, the Philippine Statistics Authority (PSA) reported that inflation averaged 2.5 percent in June, higher than the 2.1 percent posted in May but still lower than the 2.7 percent posted in June 2019. Inflation averaged 2.5 percent in the first semester of the year.
National Statistician Dennis S. Mapa said the primary reason for the uptick in inflation in June was the transportation index; Alcoholic Beverages and Tobacco index or “sin products”; and the Housing, Water, Electricity, Gas and Other Fuels index.
Mapa said the partial opening led to the 2.3-percent increase in the transport index from a contraction of 5.3 percent in May and 1.6 percent in June 2019.
He said tricycle fares were the main culprit in the increase, with a 26.04-percent increase from 6.6 percent in May. Mapa said this is only the average nationwide.
In Metro Manila, tricycle prices surged 43.7 percent on a month-on-month basis. This means that if the minimum fare was P12 in May, this reached P17 in June.
The increase in tricycle prices was even more staggering when compared year on year. Mapa said on annual basis, tricycle prices skyrocketed 129.3 percent in June, meaning prices this year were more than double last year.
The rapid increase in tricycle prices was also observed in Bicol, which had the highest increase in inflation in June at 4.3 percent in June 2020.
Image credits: Bernard Testa