By Chino S. Leyco
Finance Secretary Carlos G. Dominguez III has expressed confidence that the second package calling for rationalization of fiscal incentives and reducing the corporate income tax (CIT) rate will pass the legislative mill within the year.
Finance Secretary Carlos G. Dominguez III (Bloomberg photo)
During the Financial Executives Institute of the Philippines (FINEX) meeting yesterday, Dominguez said that the second part of the government’s comprehensive tax reform program (CTRP) is necessary as this benefits hundreds of thousands of small and medium enterprises (SMEs) in the country.
The finance chief is also optimistic that the more controversial rationalization of fiscal incentives will be approved by the Congress despite the headwind it has encountered.
He explained the rationalization of fiscal incentives is key points of the Duterte administration's reform proposal that will make the current set of investment perks more attractive to investors, rather than eliminating these incentives.
“To be clear, we are not eliminating fiscal incentives. But we want to keep granting incentives for the right reasons--and we want these incentives to be performance-based, time-bound, specifically targeted and fully transparent,” Dominguez said.
"This will encourage truly competitive investments to enter our economy,” he added.
Dominguez said that as the financial sector adapts to the disruptive change to businesses brought about by new digital technologies, the Philippines’ rapid growth will make all sectors of the economy “very busy in the coming period.”
“Despite the headwinds presented by global factors last year, we continued to grow our economy at an impressive rate. We expect 2019 to be an even better year,” Dominguez said.
He told the business community that the government is still maintaining a 7.0 percent gross domestic product (GDP) growth rate “as a fighting target” for 2019 even with major multilateral institutions having adjusted global growth projections.
“We are building on our own momentum and on the massive economic investments we have programmed for this year. We fully expect to be a growth leader in this dynamic region,” Dominguez said.
He said not enough credit is given to the no-nonsense leadership of President Duterte “in making possible the new economic powerhouse that is the Philippine economy."
Dominguez assured the business executives present at the event that “the President and his team are determined to push the reforms and bring about the strong and inclusive economic growth our people deserve.”
The Finance chief said the economy will benefit from the phased reduction of the CIT rate from the current 30 percent to 20 percent as proposed under the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill approved last year by the House of Representatives.
Along with the rationalization of fiscal incentives, the lowering of the CIT to reflect the average rate in the region will “encourage our enterprises, particularly the hundreds of thousands of SMEs to invest in expanding their businesses and hire more workers.”
He said a recent independent survey conducted among SME owners during last year’s series of “Sulong Pilipinas” workshops in Luzon, Visayas and Mindanao showed that more than 90 percent support Package 2 of the CTRP.
“We are confident the second package of revenue reforms will pass the congressional mill within this year,” Dominguez said.