Pass economic reforms, Duterte urges Congress
President Rodrigo Duterte urged Congress to pass a second package of proposed tax reforms before the end of the year, among other priority economic measures, during his third State of the Nation Address (SoNa) held on Monday.
“I am committed to a comprehensive tax reform and I ask Congress to continue the job … I hope to sign Train law Package 2 before the year ends,” Duterte said in a SONA that was delayed by a leadership tussle at the House of Representatives.
Package 2 proposes to gradually lower the local corporate income tax rate — said to be among the highest in the region — to 25 percent from 30 percent and also modify tax incentives granted to investors to make these “performance-based, targeted, time-bound and transparent.”
The second of five packages under the Duterte administration’s Comprehensive Tax Reform Program (CTRP) was submitted to the House in January, with the government quickly following up on the December approval of the Tax Reform for Acceleration and Inclusion (Train) law that took effect at the start of 2018.
Package 2 reforms are now pending in Congress as House Bill 7458, which was filed in March by House ways and means committee chairman Dakila Carlo Cua, Deputy Speaker Raneo Abu and Deputy Majority Leader Aurelio Gonzales Jr.
Besides Package 2, Duterte also noted that the government would submit to Congress all remaining CTRP packages that involve reforms in property, financial, mining, and casino income taxes.
Other reforms
He also called for the swift passage of the rice tariffication bill that will remove quantitative restrictions on rice imports.
“We are working on long-term solutions on the agenda of lowering the price of rice. We have switched from the current quota system of importing rice to a tariff system where rice can be imported more freely,” he said.
The President also promised “radical” reforms in the mining industry, reminding players to not destroy the environment or compromise the country’s resources.
He also reiterated his administration’s commitment to improve the quality and bring down the cost of local telecommunications services.
“My administration remains firm in its resolve to ensure that the Philippines’ telecom services are reliable, inexpensive, and secure,” Duterte said, particularly noting the need to “lower interconnection rates between industry players.”
Late last week, the National Telecommunications Commission released a memorandum circular ordering market leaders PLDT and Globe cut interconnection charges for calls from P2.50 to P.50 per minute and short messaging services from P.15 to P.5 per text.
The move is part of the administration’s preparations to welcome a new player to challenge the PLDT-Globe duopoly.
The President also directed all government units and agencies to fully implement the recently approved Ease of Doing Business Act.
The law mandates government agencies to comply with prescribed processing times. Simple transactions should be completed within 3 working days, while complex and highly technical transactions should take no more than 7 and 20 working days, respectively.
It amended the Anti-Red Tape Act of 2007 and required all local governments to streamline procedures for the issuance of business permits, clearances and other types of authorizations by implementing unified business application forms.
Asked to comment on Duterte’s economic promises, Timson Securities Inc. trader Jervin de Celis said he welcomed the President’s “very supportive” statement on tax reform.
“Since this will make our tax rate in line with our neighboring Asean (Association of Southeast Asian Nations) countries, I think our business environment will become more attractive to foreign companies,” he said.
The passage of Package 2 may also provide a boost for the stock market since a lower corporate income tax rate
would “boost the bottomline performance of listed companies as well as the small and medium enterprises in the country.”
Businesses will also have more cash to spend on expansion, which will contribute to faster economic growth.
“I think his statement in the SONA was clear and very business-friendly especially when he touted his admin’s effort to make business processes easier in the country. So, I guess that might buoy market sentiment tomorrow,” de Celis said.
WITH REPORTS FROM ANGELICA BALLESTEROS, MA. LISBET K. ESMAEL AND ANNA LEAH E. GONZALES
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