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Business

Congress urged to pass tax reforms

Elijah Felice Rosales - The Philippine Star

MANILA, Philippines — The Department of Finance (DOF) is urging lawmakers to pass the remaining tax measures of the Duterte administration to prepare the economy for further spending on efforts to manage the pandemic.

In an economic bulletin, Finance Undersecretary and chief economist Gil Beltran said Congress should approve the final set of fiscal reforms to survive the health crisis on a cash level.

“The country should continue to adopt fiscal reforms, particularly the tax reforms still pending in Congress, to sustain these fiscal gains,” Beltran said.

Congress has yet to pass the last two packages listed under the Comprehensive Tax Reform Program (CTRP). In particular, senators have yet to deliberate on the provisions of the real property valuation reform and the Passive Income and Financial Intermediary Taxation Act, also known as PIFITA.

The real property valuation reform, the third package in the CTRP, seeks to adopt real property valuation standards observed by the international community. Further, it will set up a single base for taxation of real estate with the use of updated values as benchmark to improve collection.

The package also intends to shield real property valuation from political issues at the local level, but leaves the power to set, change and regulate tax rates to local governments.

On the other hand, PIFITA will simplify and, in the process, minimize the number of tax rates for passive income, financial services and transactions to 36 from 80.

The measure also proposes to set a unified rate of 15 percent tax on interest income, dividends and capital gains.

Beltran said the government managed to increase its expenditures during the pandemic through reforms made on the fiscal end. He added tax collections improved in the first semester thanks to the passage of the first two packages of the CTRP and the move to adopt digital channels for revenue generation.

Based on records from the DOF, revenue effort in the first half dipped by 0.59 percentage point to 14.35 percent. However, tax effort jumped by 0.55 percentage point to 14.19 percent, as the Bureaus of Internal Revenue and Customs both posted growth of 0.17 and 0.36 percentage point, respectively.

Revenues in the first semester rose by nearly three percent to P1.49 trillion, from P1.45 trillion a year ago, exceeding the economic team’s forecast of P1.42 trillion for the period.

The government hopes to grow revenues by more than 11 percent from 2021 to 2024, to P3.99 trillion, with the objective of narrowing the fiscal deficit to 4.9 percent in 2024, from the projected 9.3 percent this year.

DEPARTMENT OF FINANCE

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