A last stand against the CTRP (and the new auto excise tax)
Just to make sure we leave our desk clear; we fully support the Duterte administration’s push for the golden age of infrastructure, even if it would cost several trillion pesos over the next five years. We believe in the integrity and abilities of the economic triumvirate of Carlos G. Dominguez III (DoF), Ernesto M. Pernia (NEDA) and Benjamin E. Diokno (DBM). We also support the noble and painful objective of the DoF’s Comprehensive Tax Reform Program (CTRP), or the Tax Reform for Acceleration and Inclusion (TRAIN) as of June 2017, after this went through several legislative grinders.
First known as HB 4774, then stretched and squeezed into HB 5636, it is now being deliberated at the Senate and, as expected, the DoF would like to maximize revenue and minimize the time to achieve the reforms by sticking to its original CTRP.
We reiterate our opposition to the CTRP and its current metamorphoses to two House Bills, on the following grounds:
• The revenue targets of several trillion pesos to finance infrastructure over five years are too high and are beyond the “absorptive” capacity of the factors of production of the economy.
• The increase in income due to reduction in personal income taxes will be negated and neutralized by rising consumer goods prices because of the staged increase in excise taxes on fuels.
• The tax revenue due to the proposed higher auto excise taxes will not be realized, despite generous financing schemes by the banks, because the overall per unit sales will decrease due to much higher prices. Moreover, the proposed taxes will zero out sales of the luxury cars, resulting in no tax revenue.