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THE Department of Finance (DoF) has been ordered to step up its legislative liaison activities to ensure the passage of the remaining tax reform packages, ahead of the opening of the 18th Congrss on July 22, among other priorities that include exploring import liberalization for more agricultural products and the sale of the government’s stake in United Coconut Planters Bank (UCPB).
Finance Secretary Carlos G. Dominguez III said in a statement: “We have to improve our engagement with the legislature, and we have to get it more organized. We have to get our tax reform packages passed by the end of this year.”
He made the remarks at recent DoF Executive Committee (Execom) meeting, reflecting the economic team’s stumbles in previous dealings with Congress, including the watering down of a number of tax provisions and the growth-dampening delays in passing the 2019 Budget.
The remaining tax reform packages include Package 2, the Tax Reform for Attracting Better and High-Quality Opportunities, otherwise known as the TRABAHO bill, which aims to reduce the corporate income tax (CIT) rate from 30% to 20%, reduced gradually by 2 percentage every two years beginning 2021 until 2029. Package 3 aims to reform property taxes while Package 4 restructures the tax regime for capital-based income and financial services.
The legislation that increased excise taxes on tobacco and alcohol products was part of Package 2+ which will tax tobacco products at P45 per pack in January 2020 from the current P37.50. Additional P5 increments will take effect for each succeeding year until 2023. It was approved a day before the 17th Congress closed.
Mr. Dominguez also instructed finance officials to convey to legislators the importance of avoiding measures that grant tax exemptions and incentives, to the detriment of the government’s long-term plans of strengthening the revenue base.
Among the other priorities of the department is to ensure proper tax collection from the Philippine Offshore Gaming Operators (POGOs) and their foreign partners. The DoF will also ensure the continued collection of unpaid obligations due the Power Sector Assets and Liabilities Management Corp. (PSALM).
Increasing the dividends raised from government-owned and controlled corporations (GOCCs) was also identified as a priority.
Dividends remitted by GOCCs as of mid-May totaled P38.9 billion, close to overtaking the record P40.7 billion for all of 2018, according to DoF.
Mr. Dominguez also directed officials to determine the feasibility of liberalizing imports of key agricultural products and the national government’s plan to purchase the stake of the Philippine Stock Exchange (PSE) in the Philippine Dealing System Holdings Corp. (PDSHC).
He also ordered a study of the privatization of the United Coconut Planters Bank (UCPB), the future of the country’s only Islamic bank, Al-Amanah within the new Bangsamoro region and the transfer of the Credit Information Corp. (CIC) to the Bangko Sentral ng Pilipinas.
Finance Undersecretary and Chief Economist Gil S. Beltran also noted the importance of the Warehouse Receipts Bill as a priority which could improve farmers’ access to credit and improve business in the sector. The bill hopes to reform the receipts registry to give financial institutions more certainty about a farmer’s potential receivables, thereby improving their chances of being granted loans.
Senate Bill 2171 amends the Warehouse Receipts Law of 1912 and was proposed by Senator Sherwin T. Gatchalian, who claims the 107-year-old law is in need of an upgrade. His bill aims to create a uniform online registry that allows all electronic warehouse receipts to be accessed.
Assistant Secretary Antonio Joselito G. Lambino II cited the importance of the full implementation of the National Single Window (NSW), an internet-based system that allows parties involved in trade to lodge all import, export and transit-related applications on a single platform.
Mr. Dominguez expressed optimism that legislators will recognize the benefits of a credit rating upgrade, after Standard & Poor’s Global raised its rating on Philippine sovereign debt to BBB+ from BBB on April 30, 2019. — Kimani Eros S. Franco