July 19th, 2021
The House Committee on Ways and Means expects President Duterte to reiterate the urgency of passing the rest of the Comprehensive Tax Reform Program. The Real Property Valuation and Assessment Reform Act is undergoing deliberations at the Committee level in the Senate. The Passive Income and Financial Intermediaries Taxation Act (PIFITA) is also pending in the Senate. Progress in both reforms is being observed by credit rating agencies, who believe that their passage is a net plus for our country’s credit standing.
We also believe President Duterte will emphasize the need to create new revenue streams. Some weeks ago, he mentioned the strategic importance of a well-regulated gaming sector to economic and fiscal recovery. The week after SONA, I believe the House and the Senate will agree on a ratified version of the tax regime on Philippine Offshore Gaming Operations (POGO). Another potent revenue stream is e-sabong taxes, which the House has already submitted to the Senate.
The committee is also concerned about improving growth, since our fiscal standing is always measured relative to GDP. The approval of the amendments to the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act will be critical to increasing foreign direct investments and creating new jobs. The RTLA, in particular, is now at the bicameral conference stage, while the other two are in the Senate floor.
We also need to make the Corporate Recovery and Tax Incentives for Enterprises (CREATE) work. There are already signs that CREATE has opened the doors to greater foreign investments. The net inflow of foreign direct investments FDIs more than doubled to $679 million in April from $317 million in 2020. But, to maximize its impacts, we need a well-trained and well-equipped labor force capable of filling in the jobs FDIs will create. This is why I believe in a stronger role for the Technical Education and Skills Development Authority (TESDA). I am hoping President Duterte will reiterate the need to transform TESDA into a cabinet-level agency capable of implementing a massive national upskilling program. Along with this, I hope President Duterte also emphasize the need for a skills-centric education system
If we are to legislate the rest of President Duterte’s fiscal and economic reforms, we also need to enact the 2022 budget early. That gives us time to discuss and approve other measures.
The Development Budget Coordinating Committee is meeting today. I am told that they may reconsider their earlier reservations on a third stimulus package. In any case, we need some form of stimulus as vaccination picks up. Stimulus packages work best when demand begins to normalize, because they create momentum. The figure in consideration is P173 billion or whereabouts. We will keep a close eye on these discussions.
The Committee on Ways and Means has a host of other measures lined up, including a Fiscal Regime for Mining, which remains very critical to maximizing the recent metals price boom. Other measures include the Ease of Paying Taxes Act, the Motor Vehicle Road Users’ Tax, and the Excise Tax on Single Use Plastics.
I also believe President Duterte may call on the revenue agencies to build on their progress in tax administration and enforcement. We are working very closely with the revenue agencies on these areas.
Although this is President Duterte’s last SONA, the Committee remains focused on enacting as many of these pending reforms as possible. The tone of President Duterte’s SONA, especially in our current socioeconomic context, will also likely zero-in on the work that still needs to be done.