MANILA, Philippines — The recently enacted tax reform bill is seen to fund about 25 percent of the P8.4-trillion “Build Build Build” program of the Duterte administration, the Department of Finance (DOF) said over the weekend.
In a statement, Finance Secretary Carlos Dominguez said the incremental revenue to be generated by Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN) would help provide the initial capital for the government’s massive infrastructure modernization program.
“This is our capital. We figure we can fund about 25 percent of the program and borrow the rest,” he said.
This means about P2.1 trillion of total requirements of Build Build Build, amounting to P8.4 trillion would be funded through the revenue-generating measures of the TRAIN, while the rest would be financed through borrowings.
Borrowings may be raised through the sale of securities to both domestic and foreign lenders, or in the form of official
development assistance from the country’s partners.
The Duterte administration’s massive infrastructure program covers 75 flagship infrastructure projects nationwide.
According to Dominguez, the program would help sustain the economy’s high growth trajectory and transform the country into a high-middle income one by 2022 while lowering poverty incidence to 14 percent.
He said it would give way to more jobs and lower transport and distribution cost of goods, which would benefit even those who are not paying taxes.
Aside from the infrastructure program, Dominguez said the TRAIN would also improve the delivery of services of the government by way of higher public spending on education, health care, and other forms of human capital development programs.
Moreover, the finance chief said up to 30 percent of the incremental revenues to be generated by the TRAIN will be allocated for a targeted cash transfer program, which would help the bottom 50 percent of the population cope with the initial effects of the tax reform law on prices of commodities.
President Duterte signed the TRAIN into RA 10963 last December 19 at Malacañang.
The law, which contains the first package of the DOF’s Comprehensive Tax Reform Program, seeks to lower personal income taxes, while increasing the excise tax rates on fuel, automobile, coal, tobacco, and sugar sweetened beverages. It also aims to broaden the tax base by removing some exemptions in the value-added tax system.
According to DOF estimates, the bill is expected to generate about P82.3 billion in 2018, or about two-thirds of the P134 billion originally intended under the bill.
The remaining one-thirds, which involves the proposed tax amnesty program, adjustments in the Motor Vehicle Users Charge, and amendments in the bank secrecy law, will be passed by Congress in the first quarter of next year.
“This is just an initial part of our gains under the Comprehensive Tax Reform Program as Congress has passed two-thirds of the expected revenue from the Package One of TRAIN. I thank Congress again for its commitment to pass the balance by the first quarter of next year,” Duterte said during the signing rites.