Train law revenues exceed H1 target
Revenues from tax reforms approved by Congress last year have exceeded expectations, Finance Secretary Carlos Dominguez 3rd told legislators on Tuesday.
“The Train Law, which you kindly passed and which was implemented at the start of 2018, contributed 33.7 billion pesos in revenues for the first half of the year — surpassing our target by 3.6 billion pesos,” Dominguez said at a briefing conducted by the interagency Development Budget Coordination Committee (DBCC).
Implemented in January, the Tax Reform for Acceleration and Inclusion Act or Train raised excise taxes on fuel and cars, among others, in exchange for lower personal income tax rates.
The Finance chief said the government expected to raise another P181.4 billion from Train and its supplemental Package 1B, which covers a proposed tax amnesty and Motor Vehicle Users Charge adjustments that Congress has yet to approve.
To generate additional revenue streams that will enable the government to sustain a massive infrastructure buildup and increased spending on human capital development, Dominguez said other packages under the Comprehensive Tax Reform Program (CTRP) would have to be passed by legislators, hopefully before the end of the year.
The Department of Finance, which earlier this year submitted Package 2 that calls for the lowering of corporate income taxes and the streamlining of fiscal incentives, has followed this up with:
• Package 2 Plus, which proposes to increase the excise tax on tobacco and alcohol products and increase the government’s share from mining;
• Package 3, which institutes reforms in property taxation to make the valuation system more equitable, efficient, and transparent; and
• Package 4, which proposes to rationalize capital income taxation to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments.
Meanwhile, Socioeconomic Planning Secretary Ernesto Pernia also told legislators that the DBCC was keeping its macroeconomic targets for this year and the next, with gross domestic product growth expected to hit 7.0-8.0 percent.
The expansion will be sustained by continued reforms, Pernia said, even as he warned of external and domestic risks such as global financial markets, inward-looking policies, a US-China trade war, financial sector risks in China and geopolitical tensions.
Locally, natural hazards, infrastructure project delays, rising inflation, balancing social protection and labor market flexibility, and peace and security are the biggest threats to the outlook, he added.
“We remain vigilant and well-positioned against these downside risks to growth,” Pernia said.
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