PACKAGE 1 of the Tax Reform and Acceleration and Inclusion of Department of Finance (DOF) is to be implemented by the third or fourth quarter of 2017.
The comprehensive tax reform program is a series of five reform packages which, according to Finance secretary Carlos Dominguez III, is aimed at making the tax system in the Philippines fairer and more efficient.
First package includes simplification of the tax system which allows entry-level workers with annual income of P250,000 and below to be exempted from the income tax. It also includes value added tax (VAT) base expansion while liming VAT exemptions. The first package of the comprehensive tax will also include the automobile excise tax and oil excise tax.
The first package is targeted to raise about P133.8 billion in incremental revenues. It has already passed the House of Representatives and is currently for consideration of the Senate.
The program was created in order to accelerate the country’s infrastructure spending and to expand social services.
Dominguez said that the Philippines had already been underspending for infrastructure over the past decades. He added those years of low investment had produced decongestion and capacity problems that are still apparent in the current time. The country, he said, had already fallen behind the Association of South East Asian Nations (Asean) neighbors in terms of productivity and efficiency.
“If we do not move quickly today, we could end up as the country with the worst infra backbone among the ASEAN countries. Not building up infrastructure backbone would deepen the inequalities between regions and island economies will be cut off from the national economic mainstream. Poverty in the Philippines will become widespread,” said Dominguez, who was also a speaker during the 4th Davao Investment Conference at the SMX Convention Center, SM Lanang on Saturday, July 22.
“The end goal of this economic strategy is to bring down poverty incident from the present 22 percent to only 14 percent by 2022. This will lift our economy from upper middle class income status by the same time frame. This will set our whole economy security on the road to high income status by 2040,” Dominguez added.
On February of this year, DOF conducted a roadshow in Davao City regarding the comprehensive tax reform.
DOF Finance Strategy and Economics Results Group undersecretary Karl Kendrick Chua discussed that from P759 billion investments for infrastructure in 2016, it is targeted to be increased to P1.83 trillion by 2022 and an additional P1.07 trillion over the six years, which is still indicative and subject for changes.
The education and training investment has around P551 billion worth of investments in 2016 and is targeted to increase by up to P1.30 trillion by 2022. The additional P718 billion over the next six years is also still indicative and subject to change.
In 2016, Health investments are recorded to be at P133 billion and is targeted to be at P272 billion by 2022, with indicative and subject for change addition of P139 billion over the next 6 years.
Social protection, welfare, and employment has P242 billion investment in 2016, which is targeted to increase to P509 billion by 2022. Additional P267 billion over the next 6 years is indicative and still subject to change. (With PR)