Former DOF officials support 2nd tax package

MANILA, Philippines — Former secretaries and undersecretaries of the Department of Finance (DOF) have expressed their support for the administration’s second tax reform package, citing the proposed measure’s potential in making the country’s tax system “simpler, fairer, and more efficient.”

In a joint statement of support, former finance secretaries Roberto de Ocampo, Salvador Enriquez, Margarito Teves, Alberto Romulo, Cesar Purisima, Jose Pardo and Jose Isidro Camacho, along with former undersecretaries Romeo Bernardo, Lily Gruba, and Cornelio Gison called for the immediate passage of the package two of the Comprehensive Tax Reform Program (CTRP).

“We, former secretaries and undersecretaries of the Department of Finance, reiterate our support for the administration’s Comprehensive Tax Reform Program, and strongly encourage the government to urgently pursue the tax reform’s second package, aimed at modernizing the fiscal incentives regime and lowering corporate income tax rates,” the joint statement read.

The former officials described the DOF’s proposed second package as “fair and well-crafted,” adding that the measure “encourages equitable and inclusive growth, a competitive business environment, and strong countryside development.”

Package 2 of the CTRP seeks for the reduction of corporate income taxes, while rationalizing fiscal incentives.

According to the former DOF officials, the government must treat fiscal incentives as public investment, and ensure that their economic benefits outweigh the costs in foregone revenue. The fiscal incentive regime must also be aligned with the country’s socioeconomic priorities, they added.

“We, therefore, believe that the fiscal incentives regime, made complex and costly by years of neglect and abuse, needs modernization, so that incentives are more transparent, performance-based, targeted, and time-bound,” they said.

“Modernizing the fiscal incentives regime will spur countryside development and public investment by incentivizing investment in less developed areas and releasing local governments from a system that allowed registered enterprises to pay preferential rates in lieu of all taxes, including local taxes,” they added.

Former DOF officials also expressed their support for the expansion of the Tax Incentives Management and Transparency Act (TIMTA), the consolidation of tax incentives into a single menu, and the harmonization of procedures through the Fiscal Incentives Review Board, with the secretary of finance as chairman.

“We also believe that the corporate income tax regime, burdened by the highest standard rate among ASEAN countries, at 30 percent, is in urgent need of reform. We strongly support the reduction of corporate income tax alongside the rationalization of tax incentives,” they said.

They said proposed reforms in the corporate income tax regime, coupled with measures to improve tax compliance, will make the country’s tax system “simpler, fairer, and more efficient.”

Finance Secretary Carlos Dominguez, during a lunch meeting with the former officials, expressed his gratitude for their “show of solidarity” in favor of the second CTRP package.

Dominguez urged the former officials to contribute to the discussions on the tax reform package, “to bring clarity to the public deliberations on tax policy.

”“That conversation will be enriched by your voices, you who have contributed so much to bring our fiscal regime to its present vigorous condition,” Dominguez said.