MANILA – Ensuring truly inclusive growth, sustained high level domestic output and a healthy dose of tax reform will propel the Philippines to upper middle-income economy status this 2019, Finance assistant secretary Antonio Joselito Lambino II said.
In an interview over radio dzMM Sunday, Lambino said the domestic economy’s decades of continued expansion, with growth rate of over six percent growth in recent years, is a big plus for the country.
The finance official, therefore, stressed the need to put in place measures that would further strengthen domestic growth and one of these measures is the tax reform program.
The first tax reform package, which cut workers’ income tax rates, was implemented starting January 2018.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, workers first P250,000 annual income is now exempted from taxes.
Adjustments were also made for those receiving higher salaries to make the tax system equitable, he said, adding that it is better to have lower tax rates so more people will be paying their taxes.
“So those who have more can contribute more, those who have less should also contribute but not as much. That is the principle that our tax reform program follows,” he said.
Earlier, Finance secretary Carlos Dominguez III said TRAIN provided workers who are earning P250,000 and below some P12 billion a month in additional income or a total of P102.9 billion as of end-September, which is the revenue loss for the government.
To counter its impact on government revenues, excise taxes on oil products were increased and excise taxes on sugar-sweetened beverages and vehicles were introduced.
Total TRAIN-related collections of the government in the first three quarters of 2018 amounted to P41.9 billion, already near the full-year target of P44.3 billion.
Gains from TRAIN are allocated for the government’s massive infrastructure program called “Build, Build, Build.”
Lambino said the Duterte administration’s infrastructure program aims to put in place necessary infrastructure that would benefit the country in the long-term.
He explained that when an area is developed, investors will be encouraged to set up enterprises and this will, in turn, increase economic activities and provide jobs, which will also allow people to pay their taxes.
“It’s like a virtuous cycle,” he said.
Aside from improvement in the business climate, Lambino said increased tax collections due to the tax reform program will also allow the government additional funds for its programs on education, health and social protection.
“Kaya po ngayon, this year, in 2019 papasok na po ang Pilipinas doon sa kategorya na upper-middle income country status,” he said.
This will elevate the country to the likes of Thailand, Malaysia and China, he added. (PNA)
