Dominguez optimistic on CTRP approval by Congress

FINANCE Secretary Carlos Dominguez III has expressed confidence that the proposed Comprehensive Tax Reform Program (CTRP) will be approved by the Congress, given the inherit merits of this plan to make the current tax system simpler, fairer and more efficient, particularly for the poor plus low- and middle-income taxpayers.

The first package of the CTRP, now pending at the House ways and means committee under a bill filed by its chairman, Rep. Dakila Carlo Cua, aims to lower personal income tax (PIT) rates as well as donor and estate taxes.

Cua’s House Bill No. 4774, which is endorsed by the Department of Finance (DOF), also aims to broaden the tax base by adjusting excise tax rates for automobiles and fuel and plugging leakages in the value-added tax (VAT), but retaining current exemptions enjoyed by seniors and persons with disabilities, among other revenue-enhancing measures.

“If you look at the tax reform package, and see and weigh the benefits and the pain that it might cause, you won’t need to use any political capital because it’s a good package. So he may not even have to spend a single iota [political capital] on this tax package,” Dominguez said.

Dominguez said he hoped that the entire CTRP would be passed in six months, “but the reality of the situation is it cannot be done.”

“The last big tax (reform) package took five years to pass, two Congresses. I hope to finish it in one Congress, three years,” he said.

The DOF’s timetable is to get Package 1 passed by June 2017, so that it can be partially implemented by the second half this year, and the entire plan, including the cuts in PIT rates, by 2018.

Dominguez said the benefits of Package One for low- to middle-income taxpayers far outweigh the minimal spikes in inflation and prices that would result from the implementation of this tax plan.

He said that for middle-income taxpayers, the PIT reductions under Package 1 “will probably save anywhere from P25,000 to P30,000 a year off the bat.”

“We can handle the inflation rates because our inflation rates have been really low, it’s below two percent last year. The extra expense they’re going to spend for, let’s say, cost of transportation, is nowhere near what they’re going to save in taxes, nowhere near. So what political capital do you have to spend on that? It’s good,” Dominguez said.