Department of Finance (DOF) Secretary Benjamin Diokno on Wednesday, Aug. 17, listed down the agency’s suggested measures to accelerate the country’s economic recovery from the Covid-19 pandemic, highlighting the agency’s support for the Marcos administration’s Medium-Term Fiscal Framework (MTFF) and tax reforms on properties and digital goods.
Diokno, who was governor of the Bangko Sentral ng Pilipinas (BSP) during the term of former president Rodrigo Duterte, commended the previous administration for “the solid macroeconomic fundamentals” it left behind.
However, he admitted that the “operating environment remains uncertain and difficult” because of the pandemic, inflation, and “unpredictable” global political economy.
“But we are fully prepared to address ongoing risks and challenges,” Diokno told lawmakers during the House Ways and Means Committee hearing that presided by its chair, Albay 2nd district Rep. Joey Salceda.
The finance chief listed several proposed measures by the DOF.
Among these are: the Real Property Valuation and Assessment Reform Bill, the Passive Income and Financial Intermediary Taxation Bill (PIFITA), the imposition of value-added tax (VAT) on digital goods and services and on single-use plastic bags, and rationalizing the Mining Fiscal Regime.
The DOF also supports the passage of the Military and Uniformed Personnel Pension Reform Bill, the Capital Market Development Bill, the Livestock Development and Competitiveness Bill, and the bills introducing amendments to the Land Bank and the Philippine Crop Insurance Corp. Charter.
Diokno, who was appointed to DOF by President Ferdinand Marcos Jr., assured lawmakers that the “economic team is committed to implementing a Medium-Term Fiscal Framework.”
He noted that the MTFF “will serve as our blueprint to reduce fiscal deficit, promote fiscal sustainability, and enable robust economic growth".
“The Framework proposes measures that will improve tax administration, enhance the fairness and efficiency of our tax system, and promote environmental sustainability to address climate change,” he said during his presentation to the House panel.
During his first State of the Nation Address (SONA) in July, Marcos emphasized the need to digitize revenue collection, which Diokno agreed to because it will “boost our tax effort, enhance tax administration, and eliminate discretion".
Meanwhile, the finance secretary took the opportunity to thank lawmakers for passing critical tax reform laws during the previous 18th Congress.
“The tax reform laws you have enacted have leapfrogged the Philippines into the company of the world's fastest-growing economies,” he claimed, sharing that the total tax intake from the enacted tax reform measures amounted to P575.7 billion.
“When the pandemic struck and stalled our economic growth, these laws were a critical factor in maintaining fiscal sustainability. The Philippines’ solid macroeconomic fundamentals, reinforced by structural reforms, enabled us to withstand the harsh effects of the pandemic and chart a clear path to recovery,” Diokno added.
He reported that the Tax Reform for Acceleration and Inclusion Law (TRAIN) raised P476.1 billion since 2018 and boosted revenues to fund the government’s infrastructure, social, and healthcare programs.
He also lauded the Tax Amnesty Act for allowing “errant taxpayers to affordably settle their outstanding tax liabilities while providing the government with more revenues for its priority programs".
From 2019 to 2021, the total additional collections from the law reached P14.6 billion, while excise taxes on alcohol and tobacco products raised a total of P85 billion in incremental revenues from 2020 to 2021.
Excise taxes, which were imposed to discourage the consumption of unhealthy goods, ensured the funding for the country’s Universal Health Care program.