DOF confident Congress will pass TRAIN

The Department of Finance (DOF) is still confident the Congress would be able to come up with a final tax reform bill that would generate enough revenues to help fund the Duterte administration’s massive investment program.

“We have every confidence that the legislature will come up with revenues that will be sufficient to fund all the various projects of the President, including the social side, the educational side and the infrastructure,” Finance Secretary Carlos Dominguez told reporters in the interview.

According to Dominguez, the DOF is assisting the Senate in revising its own version of the Tax Reform for Acceleration and Inclusion Act to improve its revenue gains than originally estimated.

“The debates were concluded (last Wednesday) and we are just helping the Senate on doing calculations on their proposals,” he said.

“They had some new ideas and we’ll see what comes out,” he added.

Initial estimates from the DOF showed that Senate Bill 1592 may only yield P59.9 billion in additional revenues in the first year of its implementation.

This is below the P133.8 billion original estimate for the House of Representatives version, which was already programmed in the 2018 budget. This is also lower than the P157.2 billion projected net gains from the original DOF version of the TRAIN.

It also corresponds to 0.3 percent of the country’s projected gross domestic product in 2018, and is seen to widen the fiscal deficit to 3.4 percent of GDP from the ceiling of three percent.

An official from the DOF had said the revenue impact of the Senate bill was lower than expected as it did not repeal many of the value-added tax exemptions, and provided a more protracted scheme on the P6 per liter increase in fuel excise tax--P1.75 per liter in the first year, P2 in the second and P2.25 in the third.

For his part, Budget Secretary Benjamin Diokno said the public needs to look at the revenue impact of the tax reform bill over the medium term.

“I think you should look at it over a period of five years. For example is the fuel tax – that’s staggered,” Diokno said in a separate interview.

The budget secretary also said the DBM is ready to make adjustments in case the first-year revenue gains from the Congress’ final tax reform bill does not reach the P133.8 billion projected in the 2018 national budget.