Delayed CTRP 1-B to affect 2018 fiscal program — DOF

The Duterte administration’s economic managers may adjust the government’s fiscal program by June this year if the second part of the first tax reform package is further delayed in Congress, a ranking finance official said.

Finance Undersecretary Karl Kendrick T. Chua said the Development Budget Coordination Committee (DBCC) will study whether the remaining R40 billion from the comprehensive tax reform package (CTRP) 1-B “is still feasible” to be collected this year.

The Department of Finance (DOF) originally targeted that the second installment of the first tax reform law for acceleration and inclusion act (TRAIN) will be passed within the first three-months of this year, which Congress failed to meet.

The tax-reform package 1-B contains the measures that were removed from the CTRP law 1-A. These are the tax amnesty as well as other tax administration provisions, such as the motor vehicle users’ charges, and the lifting of bank secrecy.

“The original target was to have it passed before recess, but it did not happen. They will resume in May, then, they have three weeks when they come back before they have recess again. Hopefully, in the next session before June 1, they can file it,” Chua said.

The delay in the passing of the CTRP 1-B is affecting the government’s 2018 fiscal program, which is under an assumption that revenues from the two-series tax reform package one would be around

R130 billion this year. Based on DOF estimates, the CTRP 1-A would only yield 90 billion in revenues in 2018.

“So far, we are still early in the calendar, maybe, by June we have to reassess if package 1B is feasible. If it’s still feasible then we can still collect. But if it’s not feasible, meaning it’s not most likely to be passed, maybe we have to roll the revenues to the following year,” Chua said.

Asked if the delayed passage will require the DBCC, an inter-agency body that sets the government’s economic assumptions, to tweak this year’s fiscal program, Chua said “this time I don’t see the need to change the numbers, but in June most likely, before the [2019] budget is finalized.”

But despite the delay, Chua said he remains “optimistic” that the CTRP-1B will be signed into law by President Rodrigo R. Duterte in the coming months.

Based on a DOF document obtained by the Manila Bulletin, the Bureau of Internal Revenue (BIR) expects the TRAIN 1-B would raise R38.9 billion this year.