The government needs to spend P2.3 trillion annually for key public investments to transform the Philippines at par with Malaysia and South Korea by 2040, the Department of Finance (DOF) said.
Based on the presentation of the DOF, the government needs to raise its investments in infrastructure, education, health, social protection, training and other programs from the present P1.27 trillion level to P2.29 billion.
“This can be achieved through tax reform,” Finance Undersecretary Karl Kendrick T. Chua said in a meeting with former finance ministers. “Complementary economic reforms will also be crucial.”
“At the end of this administration, we want to set the country on a path towards eradicating poverty in one generation — by 2040. This is our vision for the Philippines,” Chua said.
By the end of the Duterte administration’s term, the government aims to become a high middle income nation, equivalent to Thailand and China, with a poverty rate of 17 percent. Ultimately, the Philippines should achieve the high income status by 2040.
To meet that goal, Chua said the government needs to raise additional P1 trillion a year to bridge the current funding gap for key public investments.
“All these investments require additional funds — around P1 trillion every year in 2016 prices (or around seven percent of gross domestic product) on top of the current P1.3-trillion,” the newly appointed finance undersecretary said.
The needed P1 trillion annual funding could be realized if Congress would pass into law the Duterte administration’s tax reform plan, implement reforms at its two main tax agencies, and impose efficient spending.
According to the DOF, the proposed four tax packages and the tax administration reforms at the Bureau of Internal Revenue and Bureau of Customs could easily yield revenues equivalent to three percent of GDP.
Based on the initial estimates by the DOF, the government could raise P600 billion by 2019 from its tax policy and administration reforms at the BIR and Customs.
“By 2019, the proposed tax reform package aims to raise P600 billion (in 2016 prices), or three percent of GDP, to fund the priority investments of the Duterte administration,” Chua said.
Of the total, the government expects P400 billion, or two percent of GDP, will come from the tax policy reform, while the remaining P200 billion, or one percent of GDP, could be generated through tax administration reforms.
“In the BIR, we will improve taxpayer satisfaction, reduce the cost of compliance in paying taxes, gain public trust, and protect the revenue base,” Chua said. “In the BOC, we will protect revenues from smuggling, while enhancing trade facilitation.”
As seen on: Manila Bulletin