Palace lauds passage of tax reform bill

MANILA, Philippines -  Malacañang welcomed yesterday the passage of the tax reform bill at the House of Representatives even if the Department of Finance (DOF)’s original proposal was not adopted in its entirety.

Presidential spokesman Ernesto Abella said the additional revenues would be used to roll out the Duterte administration’s ambitious infrastructure program.

“We recognize that the members of the House of Representatives have approved on third and final reading House Bill 5636. He (President Duterte) has certified it as urgent,” Abella said in a press briefing in Malacañang.

Abella said tax reform is an important component of the ‘Build Build Build’ program that he claimed would stir the Philippines toward the “golden age of infrastructure” and “propel economic growth within the next five years.”

The comprehensive tax reform package proposed by the executive department involves sizable cuts in personal income tax rates, expansion of the value added tax (VAT) base, and adjustments of excise taxes on oil, automobiles and other products. The original proposal is expected to generate P162.5 billion.

The version passed by the House, however, did not contain all the provisions in the executive department’s proposal.

For instance, the House version retained the tax exemption enjoyed by cooperatives, something that the executive branch wanted removed. The retention of cooperatives’ tax exempt status will cost the government P6 billion in foregone revenues every year, according to estimates by the Finance department.

The House bill is seen to generate about P82 billion, just about half the P162.5 billion estimated revenue gains from the proposal of the executive branch.

The Senate is set to deliberate on the tax reform measure but as early as now, some senators are not keen on adopting the Finance department’s version.

“Let’s wait for the results,” Abella said.

Senate urged to swiftly pass tax reform bill

Administration congressmen urged the Senate to swiftly pass the so-called tax reform bill that they overwhelmingly approved on third and final reading yesterday.

Camarines Sur Rep. Luis Raymund Villafuerte, one of the bill’s authors, said Senate approval of the measure next month when Congress reconvenes “will equip the administration with a steady revenue flow to go full blast on its ambitious ‘Build, Build, Build’ infrastructure program while eschewing the debt trap that has saddled past growth and development programs.”

“The tax reform bill will help raise domestically a significant portion of the P8 trillion needed between now and 2022 for the government’s aggressive spending on infrastructure, instead of sourcing such revenues from borrowings that would only sink the present and future generations of Filipinos in a quicksand of debt,” he said.

For his part, deputy speaker and Batangas Rep. Raneo Abu, another author of the bill, said he and his colleagues are hoping senators would approve the tax measure soonest.

“Additional collections will fund not only infrastructure but other social services as well, like health, education, housing, and social protection,” he said.

He said part of such collections would be returned to the poor through subsidies.

Villafuerte urged the concerned government agencies like the Department of Public Works and Highways and Department of Transportation to “upgrade their absorptive capacity to ensure that the ambitious infra buildup of the Duterte administration does not end up being hobbled by slow implementation, if not non-implementation, of big-ticket projects.”

He said these agencies would receive substantial additional funding once hundreds of billions in incremental revenues from tax reforms start to come in.

The final vote on the tax bill came shortly before Congress adjourned its first regular session. The House will now print a clean copy of the measure and send it to the Senate during the recess.

The two chambers will reconvene on July 24. – With Jess Diaz