TRAIN suspension to slow BBB, other critical projects

MANILA, Philippines — The proposed suspension of the tax reform law could slow down the implementation of the administration’s massive infrastructure program and affect other key projects of the government, Finance Secretary Carlos Dominguez said yesterday.

 In a text message, Dominguez said the Senate’s proposal to suspend the Tax Reform for Acceleration and Inclusion (TRAIN) Law could affect the government’s ability to fund its infrastructure and social programs.

“Suspension of the tax reform program will certainly tend to slow down the Build Build Build program and negatively affect the government’s ability to fund the free tuition fee program, as well as increase in salaries of the police and the military,” Dominguez said.

The Senate Committee on Economic Affairs is reviewing the reported inflationary impact of the TRAIN, which it said affects the poor the most.

In April, inflation settled at a fresh five-year high of 4.5 percent, pushing the consumer price index to average at 4.1 percent in the first four months. The April figure was above the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP).

 Budget Secretary Benjamin Diokno is opposing the proposed suspension of the TRAIN, saying it may cause “more harm than good.”

 For one, he said it may affect the gains of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) and push them off track in attaining their collection targets for the year.

“The BIR and the BOC are geared toward collecting these taxes, so it will upset, for example, the revenue collection,” Diokno said.

While Diokno admitted the TRAIN has caused upward inflationary pressures, he said the law provides measures to mitigate the law’s impact on the poor, specifically through a cash transfer program.

The program provides a P200 monthly (or P2,400 yearly) assistance to the poorest Filipino families in 2019, which will be increased to P300 a month in 2019 and 2020.

Based on DOF estimates, the TRAIN Law is expected to provide the government an additional P89.9 billion in fiscal space during the first year of its implementation.

The additional revenue would be used to fund the government’s massive infrastructure and social protection programs, the DOF said.

As of the first quarter, revenue generated by the BIR rose by 14 percent to P423.1 billion.

The BOC collected P129.8 billion in the first three months, 25 percent above last year’s level and slightly above its target.