ADB backs DOF’s 'progressive' excise tax reforms

  • February 18, 2017

MANILA, Feb. 18 - The Asian Development Bank (ADB) has expressed its support for the proposed reforms in the excise taxes of automobiles and petroleum products being pushed by the Department of Finance (DOF) as these are highly “progressive tax measures” that would help support President Duterte’s 10-point socioeconomic agenda.

 

In his recent meeting with Finance Secretary Carlos Dominguez III, ADB President Takehiko Nakao said the Bank is also looking forward to the Philippines’ hosting of its 51st annual meeting of the Board of Governors that will be held in Manila on May 3-6 in 2018.

 

The ADB head also updated Dominguez on the preparations for the Bank’s  50th annual meeting, which will be held on May 4-7 this year in Yokohama, Japan.

 

In his letter sent earlier to Nakao, Dominguez, on behalf of the government, said that  “Following the Bank’s milestone of celebrating its 50th anniversary, it will be [the Philippines’] pleasure to host the succeeding annual meeting and launch the Bank’s proposed vision for the coming years.”

 

Discussing a wide range of issues with Dominguez during the meeting, Nakao said he agrees with the DOF proposal to adjust the excise taxes on automobiles and petroleum products and acknowledged that these are “progressive tax measures.”

 

The Bank also projected that the DOF’s proposed tax reform program would improve the business environment and sustain further growth and that revenue losses from the proposed reductions in personal income taxes (PIT) will be offset by broadening the value-added tax (VAT) base and increasing oil excise taxes.

 

For the second half of 2017, the ADB forecasts an expansionary fiscal policy for the Philippines with a budget spending net increase of 11.6% over the 2016 level.

 

"If successfully implemented, the new government's development agenda to step up spending on infrastructure, implement tax reforms, and cut red tape will sustain high growth rates and increase job creation," ADB country director for the Philippines Richard Bolt had said in earlier projecting the country’s 2017 GDP growth at 6.2 percent.

 

An ADB study has shown that excise tax collections in the Philippines have experienced a “dramatic decline” from 1997 to 2009.

 

The ADB has proposed an increased excise tax rates on fuel and tobacco and alcohol products, among other tax reform measures to broaden the tax base and increase revenue collections.  

 

“The country's overall tax system is relatively regressive compared with other countries in the region,” the ADB said in its 2011 assessment of the Philippines’ fiscal policy.

 

At the onset of the Duterte administration, the DOF immediately buckled down to work to craft a tax reform plan that would make the current system simpler, fairer and more efficient while raising additional revenues for the Duterte administration’s unprecedented public spending on infrastructure, human capital and social protection for the poor.

 

The first package of the DOF-proposed tax reform program is contained in House Bill No. 4774, which was filed last January by Rep Dakila Carlo Cua, who chairs the ways and means committee. 

 

HB 4774 consists of a significant reduction in personal income tax (PIT) rates plus a corresponding set of revenue-compensating measures, which include lowering the rates for estate and donor’s taxes, expanding the value-added tax (VAT) base but retaining exemptions for senior citizens and persons with disabilities, and adjusting automobile and fuel excise taxes.

 

In the meeting, Nakao also expressed his deepest condolences to the victims of the recent earthquake in Surigao and reiterated  ADB’s offer of assistance in mobilizing resources to help the affected communities.

 

Dominguez and Nakao also briefly discussed President Duterte’s  0-10 point socioeconomic agenda,  the emerging China-led Regional Comprehensive Economic Partnership (RCEP), the rise of China’s economy, and the resurgence of populist policies across the globe.

 

Nakao said the ADB welcomes the RCEP initiative and views this as a positive development if it would succeed in further opening up trade in Asia.

 

As for the rise of populist and protectionist policies, Nakao said he believes that sovereign states should prepare for such developments and acknowledged that they have a responsibility to provide social services to the people without overly relying on donor agencies. (DOF)  

 


Other News

DepEd School Building Program: A Briefer
  • August 17, 2017
PASIG CITY, Aug. 17 -- On par with the President’s directive to “Build, Build, Build”, the Department of Education (DepEd) has entered into a Memorandum of Agreement with the Department of Public Works and Highways (DPWH) to outline the strategy for the implementation of the Basic Education Facilities Fund (BEFF).   Part of the agreement was for DepEd and DPWH to jointly conduct the validation of proposed school building to determine: a) buildable spaces, b) classroom building types, and c) actual project costs. An important part of this strategy is the conduct of geo-technical...Read more
Parts of NE, Aurora to experience 11-hour power interruption on August 30
  • August 17, 2017
BALER, Aurora, Aug.17 (PIA) -- Parts of Nueva Ecija and Aurora will experience of up to 11 hours of power service interruption on August 30, Wednesday.              “Customers of NEECO II Area 1, NEECO II Area 2 and AURELCO will have outage from 7:00AM to 6:00PM,” National Grid Corporation of the Philippines Central Luzon Corporate Communication and Public Affairs Officer Ernest Lorenz Vidal said.   Affected are the towns of Talavera, General Natividad and Bongabon in Nueva Ecija and Dingalan, San Luis, Maria Aurora, Baler, and Dipaculao in Aurora.   ...Read more
The country's governors, councilors support TRAIN
  • August 16, 2017
MANILA, Aug. 16 -- Two of the country’s national organizations of local government executives have separately expressed their full support for the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) on the belief that it will make the tax system more “equitable, progressive and efficient” while raising more funds for infrastructure development and social services outside Metro Manila.   In separate resolutions, the League of Provinces of the Philippines (LPP), which groups together the country’s 81 provincial governors, and the 16,500-strong Philippine Councilor...Read more
DepEd pushes for signing of Safe Schools Declaration
  • August 16, 2017
PASIG CITY, Aug. 16 – Cognizant of the State’s responsibility to maintain the neutrality of schools as zones of peace, and to protect learners, teachers, personnel, and community members from attack by state and non-state armed groups, the Department of Education (DepEd) fully accepts and strongly endorses the Safe Schools Declaration.   Education Secretary Leonor Magtolis Briones has expressed, on several occasions, her commitment to make the Philippines a signatory of the inter-government commitment as soon as possible. The urgency of this endeavor is further highlighted by the...Read more