First TRAIN package to fund gov’t projects up to Q3 — DOF
The additional fiscal space provided by the first tax reform law would be enough to fund the government’s programs and projects only until the third quarter, according to the Department of Finance (DOF).
In an interview, Finance Secretary Carlos Dominguez said the expected P89.9 billion in incremental revenue from the Tax Reform For Acceleration and Inclusion Act (TRAIN) – which contains Package 1A of the Comprehensive Tax Reform Program (CTRP) – would cover the government’s funding requirements for its programs and projects until end-September only.
As such, the government may have to postpone some of its projects in the fourth quarter, unless Congress approves the CTRP Package 1B.
“What we have right now is enough to fund the government programs until the middle or third quarter of the year. We won’t know which one we will have to postpone until the latter part of this year so that we do not breach the three percent,” Dominguez said when asked what projects would be delayed pending the approval of Package 1B.
Earlier, the DOF said the tax reform law has been divided by Congress into Package 1A and 1B.
Package 1A includes the measure which reduces personal income taxes, raises the excise tax on fuel, automobiles and imported coal and expands the value-added tax base, among others.
Meanwhile, Package B would involve the proposed tax amnesty program, adjustments in the Motor Vehicle Users Charge and amendments in the bank secrecy law. These were originally in the TRAIN package, but were removed in the final version of the law.
Dominguez earlier said the lower-than expected revenue gains from Package 1A may widen the country’s fiscal deficit to 3.3 percent of gross domestic product (GDP) this year, without additional provisions under Package 1B.
“Package 1B is crucial to keep the three percent of GDP deficit target,” Dominguez said.
Finance Undersecretary Karl Kendrick Chua said the Senate Ways and Means Committee is expected to prepare a report on the Package 1B.
“Once they file the com- mittee report, the Senate will tackle it in the plenary, then immediately, the bicameral committee,” Chua said.
He said the Package 1B need not undergo plenary deliberations in the House of Representatives as the provisions of the package were already approved under House Bill 5636, which was approved in May last year.
The DOF is expecting Congress to pass the tax reform bundle within the first quarter.
Dominguez said the DOF may ask the President to once again certify the measure as urgent to cut its approval time in the bicameral committee.
According to the DOF, the Package 1A and 1B of the TRAIN would help the government fund its requirements for social protection programs and massive infrastructure project.