MANILA — The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) posted double-digit increase in revenue collections in the first two months of 2018 as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Finance Secretary Carlos Dominguez III, in his speech during the Inter-Pacific Bar Association forum in Taguig City Wednesday, said TRAIN has eased collection of revenues.
He said collections by the BIR rose 10.8 percent year-on-year as of end-February this year to PHP280.6 billion from year-ago’s PHP253.3 billion.
Collections by the BOC went up 26.5 percent from PHP66.8 billion to PHP85.63 billion, he said.
The first package of TRAIN cut workers’ income tax rates but hiked excise tax on fuel and introduced excise tax on sugar-sweetened beverages, among others, to address the impact of personal income tax rate cut on state revenues.
“Consequently, we are confident the aggressive infrastructure build-up we initiated will be adequately funded,” Dominguez said.
The comprehensive tax reform program has been proposed in a bid to fund the Duterte administration’s massive infrastructure program called “Build, Build, Build” which is targeted to spend at least PHP8 trillion until 2022.
About 30 percent of the revenues to be generated by TRAIN will be allocated for social protection programs while 70 percent will be used for the infrastructure program.
Roads, bridges and other projects under this program will be built in rural areas, primarily in Mindanao, to ensure that growth of the domestic economy is inclusive and benefit even the poor.
Dominguez said reforms put in place since a few years back are expected to sustain the domestic economy’s growth to around seven percent this year and ensure that it remains among the fastest-growing economies in Asia.
“Last year, we ranked among Asia’s fastest-growing economies alongside China, India, and Vietnam. This year, we expect to grow our economy by seven percent or better on the back of profound policy reforms and an aggressive infrastructure program that will promote economic inclusion and competitiveness,” he said.
The Finance chief said the debt crisis in the past, along with fiscal discipline, has resulted in underinvestment on infrastructure but since the environment has changed and fiscal health is better, the government bids to invest more in infrastructure to boost domestic growth.
Investment on human capital, through improvement of the education and health systems, are also among the plans of the government, citing the positive demographics in the country, with most of the population aged 24 years old and below.
“For the economy to be truly competitive, our workforce must be among the best and the healthiest. In the context of rapidly ageing populations around us, we are looking at our very young labor force as an asset rather than a liability. This is the single most important factor enabling our economy to grow faster into the future,” he said.
Attracting more investments is also among the goals of the current administration since this “will create meaningful jobs for the millions of young Filipinos entering the workforce.”
“Investments will enable more Filipinos to participate in the process of wealth creation,” he said, citing the distinction that the country received recently wherein it ranked first as the best country to invest in based on a survey among businessmen around the globe.
Last year, the country registered record-high Foreign Direct Investment (FDI) amounting to USD10 billion, up 21.4 percent year-on-year.
“I am certain that our young, skilled workforce is among the reasons we have earned this distinction,” he said, stressing that this is the reason the government has “worked tirelessly at creating a business-friendly political and economic environment.”
He said reforms on ease of doing business such as cutting red tape, eradicating corruption and deploying new information technologies to reduce friction in trade and financial transactions are being made to encourage more investors to place their funds in the country.
“We know we have to modernize our institutions of governance to match the rapid pace of our economy,” he added.