DoF program is sound, but Congress needs to step up

THE Department of Finance (DoF) regularly provides updates on the state of the government’s fiscal situation, and it forwarded the latest news to our offices late last week. The report summarizes the government’s situation (as of May 31, as it does take some time to compile all the necessary data) with respect to revenue collection, other funding activities, ongoing policy reform measures and Covid-19 response initiatives. The report should be appreciated by the public for both the information it contains and the tone with which it is delivered.

One of the positive things we have noted over the past couple of years with Secretary Carlos Dominguez 3rd at the helm of the Finance department — and the same can be said of the Bangko Sentral ng Pilipinas under Governor Benjamin Diokno — is that there is a reassuring frankness in the news that is shared. Of course, the information is shared in the most positive way possible; that is simply good practice for any organization. Optimism, however, is not allowed to get in the way of accuracy and directness. After innumerable years of listening to government officials condescending to the media and the public — a habit many unfortunately still have not discarded — statements coming from the country’s economic managers under this administration are a breath of fresh air.

Most of the details contained in the DoF update were reported as they happened, so there is no need to repeat all of them here. There are some, however, that are worth highlighting.

With normal government revenues severely compromised by lockdowns that lasted all of April and May and part of March, the DoF has tried to maximize other revenue sources. These include a significant improvement in tax collections from Philippine offshore gaming operators or POGOs, from just P338 million in the first quarter of 2019 to P1.4 billion in the first quarter of 2020; early remittances of dividends from government-owned and -controlled corporations or GOCCs, amounting to P149 billion through mid-June of this year; and, through the Bureau of Treasury, two successful offshore bond issuances totaling 1.9 billion euros and $2.35 billion, respectively.

The report also details how the DoF’s two main revenuecollecting agencies, the Bureau of Internal Revenue and the Bureau of Customs, have intensified their enforcement activities against tax evaders and smugglers.

In addition, the DoF has accelerated digitalization initiatives across its areas of jurisdiction to improve the speed and efficiency of government transactions and delivery of social and wage support programs.

While the DoF is keeping the country in reasonably good financial health by doing as much as it can with what it has to work with, an underlying message of the situation report is that Congress is not doing its part, or at least, not doing it as quickly as it should.

Package 2 of the Comprehensive Tax Reform Program, which seeks to reduce the corporate income tax rate and rationalize fiscal incentives, has been slightly retooled as a Covid-19 response measure, offering businesses an immediate 5-percent income tax cut from 30 percent to 25 percent. The bill, now called the “Corporate Recovery and Tax Incentives for Enterprises Act” (Create), has been in the Senate’s hands since mid-February, but it is yet to be passed. Although the government would sacrifice some revenue — about P42 billion in the second half of this year, if Create was implemented immediately — those are funds that businesses can use for restarting their operations, expanding their businesses and paying workers.

Although the DoF expresses optimism the measure will be enacted before this year is out and does not criticize its legislative colleagues, we certainly can. The Create bill and several other broad economic measures that have been crafted as responses to the unprecedented Covid-19 crisis should be the first and only priority of both houses of Congress right now. It is an irresponsible dismissal of the people’s best interests to push the work of passing them to the margins in favor of less important distractions.

The only way the country will successfully pass through the current crisis is if everyone with a stake in the outcome puts forth their best efforts. The DoF and other government agencies are putting in theirs; it is quite past time for Congress to do likewise.