With flexibility
In this digital age, I find myself spending, on the average, more than three hours a day reading online news for updates on what’s going on around the world, be it in Twitter, Instagram, Facebook, Viber, Whatsapp, including, of course, surfing the websites of local and foreign newspapers.
Thus, I was a bit bemused reading the news on the backing of former finance secretaries and undersecretaries for Package 2 of the Tax Reform for Acceleration and Inclusion (TRAIN) in the Twitter account of Finance Secretary Carlos “Sonny” Dominguez, replete with photos and well ahead of the story written by reporters covering the beat.
Amidst the ongoing debate among lawmakers to put on hold some of the provisions of TRAIN 1, largely due to the rise in inflation and the spiraling in the prices of petroleum products, hats off to Mr. Dominguez for seeking their support. It speaks well on how he values the views and opinions of his predecessors.
“No pain, no gain,” Philippine Stock Exchange Chair Jose T. Pardo explains his endorsement despite his non-physical presence. Also not present at the meeting but voicing his backing was Singaporebased Credit Suisse Asia-Pacific Vice Chair Jose Isidro Camacho.
A manifesto of support was signed during the May 18 meeting at the Ayuntamiento de Manila, headquarters of the Bureau of Treasury, by former finance secretaries – Margarito Teves, Roberto de Ocampo, Salvador Enriquez, Alberto G. Romulo - and three finance undersecretaries – Lily Gruba, Cornelio C. Gison, and Romy Bernardo.
I got hold of a copy of the manifesto. I noticed that Mr. Teves did not give his unequivocal support. There was a footnote: “With few modifications.” Curious, I sought out Mr. Teves what he meant exactly. “I signed the manifesto of support, but this does not necessarily mean I am governed solely by it. “With modifications’ means, it would give me some flexibility to make suggestions” as the TRAIN 2 chugs through the legislative rail.
Prior to leaving the meeting, Mr. Teves submitted some suggestions, particularly on the reduction in Corporate Income Tax (CIT) from the current 30 percent to 25 percent, and the rationalization of the tax incentives. The reduction in CIT will make the Philippines more competitive with its regional peers. Other ASEAN countries are already moving to reduce their CIT rate further. Even with the lowering to 25 percent, the country will still have the highest CIT rate. Government is, at the “proper time, seriously consider adjusting” the CIT rate further down to between 21 and 22 percent.
The cornerstone of Mr. Teves’ recommendations is the rationalization of the tax incentives by making the Finance Chief – as the “guardian of the fiscal prudence” – to have the final say on the incentives. He views the existing fiscal incentive system as the “most generous” in the region but has not contributed significantly, to an “increase” in Foreign Direct Investments (FDIs).
A comparison of FDI inflows showed that the Philippines still lags behind its peers, with Singapore taking the biggest slice at a hefty $49.8 billion followed by Indonesia at $15.4 billion. Vietnam even edged out the Philippines receiving $10.1 billion. The Philippines was in fourth spot at $7.8 billion followed closely by Malaysia at $7.7 billion, with Thailand at the bottom at $6.2 billion.
As I said earlier, it was not an all-out support for TRAIN 2. Former finance chief Teves opposes the DOF’s veto power on the cancellation or suspension in the granting of incentives. The recommendation is to give the power to the President instead of to the finance secretary.
Before ending our discussions, I asked Mr. Teves about the rumors going around that he is making a comeback as public servant – chairman of the Social Security System. He neither confirmed nor denied it; instead he gave me a hearty laugh. Your guess is as good as mine.
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