More borrowings loom as TRAIN yield below goal

The government would have to tap the debt market more to fund its ambitious infrastructure program due to the lower revenue yield of the first package of the tax reform agenda, a top economic manager said.

Congress ratified on Wednesday the final version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill following a meeting of the bicameral conference committee that reconciled conflicting provisions in the House of Representatives and Senate versions.

The first package contained provisions for lower personal income taxes, expanding the value-added tax base, raising taxes on petroleum products, automobiles, and impose taxes on sugar sweetened beverages.

The revenue yield, however, was only placed at below P134 billion billion in the first year of implementation, way below the P167 billion originally sought by the Department of Finance.

“Well, we have already anticipated that there will be some reduction from the earlier expected revenue generation. So, we will probably have to do some borrowings, we will have to sell bonds. In fact, the finance department is already planning panda and samurai bond issues. These things have already been taken into account in our financing plans,” said Socioeconomic Planning Secretary Ernesto Pernia.

The government, however, would remain cautious in tweaking its borrowing program as there are still other means of increasing government revenues such as curbing corruption and improving customs administration.

“I think the borrowing is done on a case by case basis. We do not plan to borrow so much right away. We do not set a target. We will do it as we go along,” said Pernia.

“I guess there would be more efforts to bring in more revenue like reducing corruption. So I think there are other avenues to lower gaps such as improving administration in BIR (Bureau of Internal Revenue) and Customs,” he added.