An official from the Bangko Sentral ng Pilipinas said that the negative effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law would only be transitory or temporary as they assure that they are creating mitigating measures to ease its impact.
Senior director of BSP Department of Economic Research, Zeno Ronald Abenoja, on Tuesday said that TRAIN is very vital to help fund the government’s infrastructure projects under President Rodrigo Duterte’s administration.
“These are transitory or temporary effects particularly in prices of key commodities due to TRAIN,” he said, adding “There are some mitigation measures to assure that those affected will not carry the burden of an increase in taxes.”
In earlier reports, several labor groups and organizations in Negros Occidental have already aired their sentiments and oppositions to the implementation of TRAIN law due to increase in prices of commodities despite the adjustments on income tax exemptions.
Since its implementation in January, a provincial bus company and ferry operators have already increased their fares due to hikes in fuel prices, while labor groups have demanded regional wage increase of up to P150 daily because of the increased prices of goods.
Concerning TRAIN, Abenoja said that they are doing measures to guarantee that this increase in prices will not translate into second ground effect.
‘INFRA INVESTMENTS NEEDED’
The growth in infrastructure project spending will help improve the economic capacity and help sustain the economic momentum of the country, said Abenoja, who led the BSP conference on “Gearing Up for External Competitiveness” at the Seda Hotel in Bacolod City Tuesday.
He noted that in past years, the spending of the government on physical infrastructure projects was only 2 to 4 percent of the Gross Domestic Product, but under Duterte’s administration, it grew to 7 percent.
“The administration is investing both in physical and human infrastructure…we need to help sustain the economic momentum,” he said.
He said human infrastructure refers to investments of the government in health, education, and well-being of the people, while physical infrastructure is about roads, bridges, airports, and seaports. The government has increased its expenditures on the physical infrastructures up to 2022, he added.
These infrastructure projects are found in the government’s ‘Build, Build, Build’ program where Neg. Occ. is eyed to benefit from the building of billion-peso worth of link bridges going to Panay and Cebu islands.
Abenoja said the economy in the first quarter this year grew at 6.8 percent, and this growth momentum should be appreciated, as it is a testament to the resiliency of the economy.
This growth is already in the 77 th quarter where the country continues to enjoy growth from its economic reforms in the 1990s where the Philippines became open to more trade and industries and improving its policies, not only in Metro Manila but in different regions, he said.
“This is something we experienced for opening and putting up competitions (in the country),” he said, adding that to maintain the growth, more investments in infrastructures are needed.
“How are we going to finance that?” he asked, adding “Tax reform will raise the budget for physical infrastructure.”
Abenoja said that with the seen impact of TRAIN on Filipinos, the government has been creating measures to help more people in the lower segments of the population.
He said the government has been spending a few billions to subsidize poor families across the country, and this is projected to reach 10 million households this year. It will help manage the income of the poorer households, he added.
“Wage adjustments asked by different regions may also be tempered because they will have a subsidy to help offset the impact of prices,” Abenoja said.
Apart from subsidies to the poor, the government has also created the Pantawid Pasada program for the public utility sector for them to have some amelioration or help amid the impact of higher pump prices, he added.
Abenoja said that close monitoring of prices is also being done by the departments of Energy, Trade and Industry, and Agriculture to ensure reasonable adjustments.
The government is also working with the legislative branch to implement tarification of imported rice, Abenoja said, adding that the BSP appreciates the importance of this initiative to help lower domestic rice prices and help the Filipinos cope with the temporary increase.
‘SUPPORTING TRAIN AIMS’
The DOF is proposing four tax reform packages, including the recently approved TRAIN law.
There will be Package 1B that will adjust estate tax amnesty, a general amnesty, bank secrecy relaxation, and automatic exchange of information, Package 2 Plus, which will remove value-added tax exemption from coal and casinos;
Package 3 that will focus on property taxation and valuation, and Package 4 for capital income and financial taxes.
“What the tax reform aims for is to raise revenue and also to make sure that the wider segment of society is benefiting from it,” Abenoja said.
These reforms on taxation will make the income tax more progressive and the business community will provide this by right taxes and stable regulatory environment, he said.
He added that this will make the tax regime more efficient and easier to manage and eventually prevent leakages.
“There are more packages…We have yet to see the updated details but in general, we support the aims of the tax reform,” Abenoja said.*MLG
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