MANILA – Suspending the implementation of the government’s tax reform program would lead to a slowdown in the rollout of the infrastructure program and could possibly hurt social protection programs, the Department of Finance (DOF) said Sunday.
“The suspension of the tax reform program will certainly tend to slow down the ‘Build, Build, Build’ program, and possibly negatively affect the government’s ability to fund the free tuition program as well as the increase in salaries of the police and military,” Finance secretary Carlos Dominguez III said
TRAIN, or the Tax Reform for Acceleration and Inclusion, was signed into law by President Rodrigo Duterte in December, effectively reducing the personal income tax (PIT) rate and expanding the value-added tax (VAT) base.
Under the “Build, Build, Build” program, the government plans to spend over P8 trillion until 2022, largely funded by government revenues from taxes.
This year alone, the Philippines plans to roll out 76 big-ticket projects cumulatively valued at $35.5 billion, or P1.1 trillion.
“TRAIN is a long-term measure that would push the economy to a much higher development path, create more jobs and improve the living conditions for our people,” Finance Undersecretary and chief economist Gil Beltran said.
Sen.Benigno “Bam” Aquino IV, however, last week pushed for the passage of a provision that would give the government the authority to stop the implementation of the law once inflation breaches the target range.
The central bank said inflation is expected to settle at 4.6 percent this year, above the 2- to 4-percent target range of the government.
Beltran said, however, that the recent uptick in inflation is only temporary and is only partially affected by the TRAIN Law.
“All these programs we are implementing, which are made possible because of the additional revenues from TRAIN, are meant precisely to prevent prices from rising further in the future,” he said.
“The moderate impact of inflation is being mitigated by lower income tax rates and implementing cash transfers for the short-term, and; the health, education, social protection, and infrastructure programs in the medium- and long-term,” Beltran said. (GMA New)
