MANILA – Finance Secretary Benjamin Diokno said on Tuesday tax reforms of the past administration provide the current government the fiscal space that will allow it to further expand the domestic economy capacity.
During the post-State of the Nation Address (SONA) economic briefing of Cabinet members at the Philippine International Convention Center (PICC) in Pasay City, Diokno said the government now has a better tax system due to the reforms done during the previous administration.
“And we will enhance the improved tax system. So, that will give us more revenues,” he said.
These reforms included the Tax Reform for Acceleration and Inclusion (TRAIN) law, which reduces personal income tax (PIT) for workers in the lower income threshold, provides uniform tax rates for estate and donor’s tax, and simplified the computation of capital gains tax, among others; and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which is the government’s largest stimulus program against the pandemic as it encourages more foreign investments into the country.
Diokno also cited the move to right-size the government as among the reasons for his optimism on the government’s fiscal space.
He said the plan will allow the government to “be in a much better shape” and “can do much more with less.”
“So we will have some efficiency gains as a result of that,” he added.
He said the existence of around 200 ready-to-implement projects, unlike the lack of it when the Duterte administration started, is also a plus for the current government.
Diokno also cited the signing into law of the Public Service Act, which he dubbed as a “game-changing reform”, which the government can tap to further boost the government’s bid to improve the country’s infrastructure.
“Because we feel that this is our moment, the Philippine economy can move much faster this time compared to other stages in our economy and so a stronger economy means more revenues down the road,” he said.
Diokno said the government will not borrow as much as it did during the pandemic because the tax reform measures that materialized during the previous administration will help boost government revenues.
He said the new administration will also push for additional tax reform measures to enhance tax administration.
“So on that basis, we expect revenues to go up significantly and at the same time we will try to make government spending more efficient,” he added.
Asked whether these measures will be enough to plug the budget gap, Diokno said: “not necessarily but it will (put in) more efficiency in government spending.”
Budget and Management Secretary Amenah Pangandaman said among the top legislative reforms that the current administration will push include the right-sizing bill and the budget modernization act.
She maintained that the right-sizing bill will help improve the bureaucracy by having “an agile, efficient, responsive, and technology-driven workforce.”
“So, it is not actually a mass layoff of government workers. It is actually making it more efficient to be able to service the people,” she said during the same economic briefing.
Pangandaman said the budget modernization system “will instill or strengthen fiscal discipline among our government employees.”
“We will use and allocate our scarce resources to be able to finance our priority programs and projects. We will ensure that every peso in our GAA (General Appropriations Act) will be spent and implemented timely,” she added. (PNA)