No TRAIN, no Build Build Build — DOF

The government may not be able to fund about half of the budget needed for its massive infrastructure program, dubbed Build Build Build, if the proposed tax reform bill is not passed into law, the Department of Finance (DOF) said yesterday.

During a Senate Committee on Appropriation hearing, Finance Secretary Carlos Dominguez said the Tax Reform for Acceleration and Inclusion Act (TRAIN) plays a crucial role in generating funds for the government’s infrastructure program which is expected to require up to P9 trillion in investment until 2022.

“It’s very important. Without the TRAIN, we will probably not be able to fund half (of the program),” Dominguez said, adding that the infrastructure program “will not continue as projected. (It will be reduced) by less than half.”

The Duterte administration plans to embark on a massive public spending program, anchored on accelerated infrastructure development and strengthened delivery of social services, to sustain economic growth and ultimately, reduce poverty.

In line with this, the govern- ment is pushing for the Comprehensive Tax Reform Program, which aims to simplify the country’s tax system and provide a sustainable source of fund for said spending program.

The TRAIN act, which contains the first package of the DOF’s Comprehensive Tax Reform Program (CTRP), aims to simplify the country’s tax system by lowering income tax rates, unifying estate taxes and broadening the value-added tax base.

It also seeks the adjustment of excise taxes on fuel, automobiles and sugar-sweetened beverages, and prescribes improvements in the tax administration of the Bureau of Internal Revenue and the Bureau of Customs.

According to Dominguez, the Senate version of the tax reform proposal, or Senate Bill 1408, is expected to generate about P169 billion in the first year of its implementation, alone.

Broken down, the finance chief said a loss of P126 billion is projected to be incurred from personal income tax cuts, but this would be offset by the revenue generating measures in the bill.

Dominguez said that the first package of the CTRP, alone would not produce enough revenue to fund the government’s infrastructure and social services programs.

“Succeeding packages of the CTRP will be brought to legislature soon,” he said, referring to the four other packages the DOF has drafted.