Big-ticket items could be hampered of tax reform package fails to pass Congress: DOF

January 27, 2017

Implementing huge infrastructure projects could be hampered if Congress fails to pass the proposed tax reform package being pushed by the Duterte administration, a senior official of the Department of Finance said Friday.

In a press briefing in Malacanang, Finance Secretary Karl Kendrick Chua said over the medium term, the government needs to raise some P366 billion per year between 2016 and 2022 or P2.2 trillion in total.

This could be achieved through tax reform, which is "integral to the larger goals of the administration and crucial for achieving the vision of a prosperous country," he said.

Of the total amount of additional revenue to be raised, the government needs additional P1.073 trillion in the next six years to finance infrastructure projects, Chua said.

"If we fail to pass the tax reform, we will find difficulty in funding our infrastructure (projects). So, it's in the budget but (under) unprogrammed fund. It means that they could not start (the implementation) without sufficient fund," Chua explained.

"No tax reform, no infrastructure. So we will just muddle through," he added.

Among the infrastructure projects to be funded from revenues to be generated from the reform package include major highways, expressways and flood control projects, such as the Bonifacio Global City-Ortigas Center Link Road, UP-Miriam-Ateneo Viaduct along C-5/Katipunan, Panay-Guimaras-Negros Link, Edsa-Taft Flyover, and Pasig-Marikina River Channel Improvement.

According to the National Economic and Development Authority, infrastructure spending should be increased from 5.4 percent of GDP in 2017 to 7 percent of the GDP  in the following years to achieve the country’s vision of reducing  poverty and becoming an upper middle income economy by 2022 and close to becoming a high-income one by 2040.

The DOF submitted to Congress in September last year the Package One of the Comprehensive Tax Reform Program (CTRP), which include lowering of personal income tax rates, broadening the Value Added Tax (VAT) base, and increasing the excise taxes on oil products and automobiles. Celerina Monte/DMS