DOF hopeful on passage of remaining tax packages

MANILA, Philippines — The Department of Finance (DOF) has expressed hope that the recent credit rating upgrade granted by S&P Global Ratings would help convince lawmakers to pass the remaining packages of the government’s Comprehensive Tax Reform Program (CTRP).

In a statement, Finance Secretary Carlos Dominguez said the approval of the first CTRP package, the Tax Reform for Acceleration and Inclusion (TRAIN) Law, was among the factors cited by S&P in assigning a “BBB+” rating for the country.

Dominguez said S&P also mentioned in its report that the passage of the rest of the tax reform packages could lead to another credit rating upgrade, and help the government attain its goal of getting an “A” rating in two years.

“I’m sure that the Senate and the House, the Senate in particular, can see the benefits of what they did (with TRAIN). They are the ones who enabled this credit upgrading by passing the bill,” Dominguez said.

The finance chief hopes that lawmakers would acknowledge the tangible benefits of a credit rating upgrade for the country, which, as stated by National Treasurer Rosalia De Leon, would help the government save roughly P3 billion in interest payments, an amount the government could instead allocated for its priority programs.

“That goes to the benefit of the Filipino people. We have another P3 billion that we can spend for education, for healthcare,” Dominguez said.  “So there are positive benefits from this, and I hope that with this credit rating upgrade recently, the Senate will really consider passing these bills that will redound to the benefit of the Filipino people.”

Last April, S&P upgraded the Philippines’ long-term sovereign credit rating from “BBB” to “BBB+” — two notches above investment grade rating — with a “stable” outlook.

In its report on the Philippines’ credit rating upgrade, the debt watcher said it “may raise the ratings over the next two years if the government makes significant further achievements it its fiscal program, or if the country’s external position improves such that its status as a net external creditor becomes more secure over the long term.”

Currently, the DOF is pushing for the passage of four remaining tax reform packages in Congress.

These include Package 2, which covers the reduction in the corporate income tax rates and the rationalization of fiscal incentives. Package 2 Plus, meanwhile, pushes for higher excise taxes on tobacco and alcohol.

Package 3 involves reforms in the property valuation system of local government units, while Package 4 focuses on the rationalization of capital income taxes.