Massive infra dev’t, tax reform key to rebuild PH competitiveness – DOF

Finance Secretary Carlos G. Dominguez III said the government is prioritizing the infrastructure building and the realignment of income tax rates to rebuild the Philippines’ global competitiveness.

During the recent Dutertenomics forum, Dominguez admitted that the country’s infrastructure backlog and high levies are discouraging investors to set up shop in the country despite its robust economic growth.

He noted that infrastructure development was neglected during the past administrations.

“For an archipelagic country, poor infrastructure is debilitating. It raises the costs of transporting good between islands. That is the reason our food price regime is high,” Dominguez said.

“Our congested roads and ports discouraged investors who need to operate on just-on-time deliveries. Our high power costs and unstable supply discouraged investments in manufacturing,” he added.

The finance chief also said “our personal and income tax rates are higher than the rest of the region. We cannot expect companies to set up shop here if we tax them more than our neighbors do.”

For this reason, Dominguez said the Duterte administration should begin rebuilding the Philippines’ competitiveness by filling the infrastructure backlog and realigning the country’s income tax rates.

The Duterte administration’s comprehensive tax reform program (CTRP) bill is currently pending in Congress that once passed into law, will lower income tax rates as well as fund the country’s badly needed infrastructure.

The Department of Budget and Management (DBM) said the administration needs R8 trillion to R9 trillion from 2017 to 2020 to finance the Duterte administration’s ambitious infrastructure program.

Dominguez said the CTRP is the “key link” to the “grand effort” to break out from the cycle of low growth and deliver a “dynamic and truly inclusive economy to Filipinos.”

Dominguez said that Malacañang's plan to accelerate spending on infrastructure would require additional revenue measures that could only be generated through the CTRP.

“The CTRP is an indispensable component of the Duterte administration’s economic strategy. It is an audacious strategy that seeks to lift our country to upper middle-income status by 2022 and high-income status by 2040,” Dominguez said.

The finance chief added that now is the time to move decisively in carrying out the government’s “grand effort," given the convergence of positive factors that are conducive to high and inclusive growth.