MANILA, Philippines – Economic Planning Secretary Ernesto Pernia and Budget Secretary Benjamin Diokno have warned of possible adverse consequences if Congress continues to drag its feet on approving a comprehensive tax reform package.
In separate interviews during the Bangko Sentral ng Pilipinas (BSP)’s annual reception for the banking community Tuesday evening at the Metropolitan Museum at the BSP Complex along Roxas Blvd, Pernia expressed concern about a possible credit ratings downgrade by the middle of this year if Congress is still not able to pass a tax reform package proposed by the Department of Finance (DOF).
Pernia, however, is still hopeful that with President Duterte’s prodding, Congress will pass the necessary revenue generating measures needed to fund the administration’s economic and infrastructure program.
Pernia, who is also the director-general of the National Economic and Development Authority, emphasized the need to enact the tax reform package by the first half, warning that a further delay could already impact the country’s credit ratings by the middle of this year.
“It could start to impact our credit ratings by the middle of the year when the credit ratings agencies are set to give out their reports,” Pernia told The STAR.
Diokno was also optimistic that Congress would approve a tax reform package this year, but admitted that if the measures are not approved in full, the country’s infrastructure outlay would have to be cut by 2019.
Diokno expressed preference for a one shot approval of the entire tax reform package rather than the piecemeal approach of the DOF.
Diokno assured though that the government has time this year since “the 2017 budget is already approved, while we will start working on the 2018 budget by the
He stressed though that if the tax reform package is still not approved by 2018, “we may have to cut the infrastructure budget for 2019.”
The proposed tax reform package of the DOF contains some unpopular revenue measures that include raising the excise taxes on oil products, restructuring the excise tax on automobile, as well as the much needed restructuring of the personal income tax system.
The proposed tax reform package is intended to help fund the Duterte’s administration’s ambitious socio-economic and infrastructure program.