Seeing revenue shortfall from TRAIN, NEDA rethinks infra financing

MANILA, Philippines — The country’s socioeconomic planning chief on Wednesday said policymakers should “rethink” what financing scheme must be implemented to fund the Duterte administration’s aggressive infrastructure push.

That was after estimated take from a new tax law turned out to be less than what the government had hoped to raise.

READ: TRAIN falls short of revenue target

“That shortfall in the revenue take would require some rethinking of what mode of financing we should be going into,” National Economic and Development Authority Director-General Ernesto Pernia said in a business forum.

President Rodrigo Duterte has vowed to upgrade the country’s dilapidated and aging infrastructure through his administration’s P8.44-trillion “Build, Build, Build” program.

To avoid delays and higher project costs, the Duterte administration said it will shift from public-private partnership as the primary mode of financing and will rely more on public funding and official development assistance (ODA). 

The government will also employ a “hybrid” model, in which construction is financed by the government or ODA and operation and maintenance is entrusted to the private sector.

To generate revenue for his multi-billion dollar infrastructure plan, the president last December signed into law Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Under the fresh law, personal income tax rates will be reduced while estimated revenues to be foregone will be offset by higher excise levies on petroleum and automobiles, among others.

The projected tax take under the TRAIN law was originally set at P134 billion in the first year of its implementation. 

But according to the Department of Finance, the TRAIN act may yield only about two-thirds of initial revenue target, as Congress tackles the remaining “one-third” of the law, which involves provisions on a general tax amnesty and amendments in the bank secrecy law, among others.

READ: Additional TRAIN measures to be passed in 2018