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SoNA 2020

Tax reformers for the better

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The Duterte administration clearly made significant strides following the series of reforms it had implemented over the previous years.

Among these notable reforms was the Comprehensive Tax Reform Program (CTRP), having several packages to transform and improve the country’s tax system, ultimately benefitting Filipinos.

The Tax Reform for Acceleration and Inclusion (TRAIN) was CTRP’s first package and corrected a number of deficiencies in the tax system, including the inequity of it.

In particular, TRAIN reduced income taxes for 99 percent of income taxpayers, easing their tax burden for over two decades of non-adjustment.

The Department of Finance (DoF), who spearheaded and was a staunch advocate of these reforms, stressed the adjustment in income taxes provided the administration with the much needed funds for its ambitious infrastructure development program while reducing poverty incidence in the country.

The bulk or 70 percent of the incremental revenues from TRAIN is being utilized for the “Build, Build, Build” projects, while the remaining 30 percent are being spent for social services programs.

Likewise, tobacco products were imposed additional levies under this reform, along with sweetened beverages, the former slapped with higher excise taxes under the Package 2+.

Package 1B of the CTRP or the tax amnesty law provides delinquent taxpayers to have a “clean slate,” as this reform allowed the settlement of outstanding tax liabilities at an affordable rate.

Estate tax amnesty under the same package was also beneficial to those who have existing estate tax obligations as it covers estate of decedents on or before 31 December 2017, and ensures the proper transfer mechanism of the real property.

While the remaining CTRP packages await the approval of the lawmakers, President Rodrigo Duterte has already endorsed such bills, to be fast-tracked and treated as priority by the Congress.

Tax collection will improve revenues and benefit Filipinos.
AGENCE FRANCE-PRESSE
STREAMLINING

Poverty incidence down

With these reforms in place, the country’s poverty incidence showed notable improvement at 16.6 percent for the full year of 2018, down from the 23.9 percent in 2015.

The Philippine Statistics Authority reveals data for the country’s poverty incidence every four years, covering a three-year period from its last assessment year.

Top economic officials earlier expressed confidence of hitting their 14 percent target in terms of poverty incidence by 2022, giving them the legroom to further lower their target to 11 percent.

Finance Secretary Carlos Dominguez III earlier said that a lower poverty incidence is “certainly possible” given the pace of its reduction in the previous years, thanks to the string of reforms they have implemented.

“The government will hit its target of pulling down poverty incidence… with further reforms such as the full implementation of Universal Health Care and higher sin taxes to ensure sufficient funding for this health care program for all Filipinos,” Dominguez said.

“We have advanced a number of the game-changing reforms we set out to accomplish at the start of the Duterte administration. If we pass the rest of the reforms in the Zero-to-10 Point Socioeconomic Agenda, we will move even closer to the President’s ultimate goal of a comfortable life for our people,” he added.

POVERTY alleviation.

Pandemic impact

Meanwhile, the progress of the dreaded coronavirus disease in the country placed the government’s poverty incidence at risk as the World Bank casted a higher poverty rate this year following the significant drop in employment data.

As such, World Bank senior economist Rong Qian noted that supportive policies are key to a sustainable recovery as the economy transitions to the so-called “New Normal.”

“Fiscal policy should focus on social protection measures to help households, especially the most economically vulnerable groups to provide temporary relief,” Qian explained.

In terms of the sharp decline in employment rate, the Finance chief previously said these jumps both in the employment and unemployment figures were temporary as the government-imposed lockdown measures brought them; hence, it will soon return to normal as the economy reopens.

Acting Socioeconomic Planning Secretary Karl Kendrick Chua likewise shared the same sentiment as he expressed his optimism about their poverty target amid the pandemic.

“Given the pandemic, (poverty numbers) are of course expected to go up but there are many indications that this is only temporary and we have a strong chance to still hit the target,” Chua said.

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