By Charmaine A. Tadalan, June 28 2019; Business World

Image Credit to GMA News

THE DEPARTMENT of Finance (DoF) on Thursday proposed more frequent meetings between state economic managers and Congress in order to facilitate legislation of priority measures — a proposal lawmakers were open to.

“I propose that the economic team and Congress engage more frequently so that we can mutually move forward with legislation that truly contributes to the common good,” a DoF statement quoted Finance Secretary Carlos G. Dominguez III as saying.

“In this direction, the DoF (Department of Finance) is already reorganizing to assign more full-time directors and staff to engage with Congress on a weekly basis.”

The remarks were made ahead of the opening of the 18th Congress on July 22 and in the aftermath of the 17th Congress, that saw a four-month delay in enactment of the 2019 national budget, which President Rodrigo R. Duterte slashed by P95.3 billion to P3.662 trillion to take out irregular allocations, the signing into law of just two of several planned tax reforms and a few national measures ending up vetoed by the President.

Mr. Dominguez noted that lawmakers of the 17th Congress proposed 147 bills that collectively would have either eroded revenues by P178 billion or added P799 billion in mandatory spending, or a total of P977 billion that the government cannot afford to implement.

He also noted 31 other bills sought to form more freeports and economic zones that would have added to 546 existing tax-free areas and which would have padded both foregone revenues and leakages.

“We do not think this is how we should do policy — that is create more tax-free zones or sectors, and ask other Filipinos to pay for these incentives. Surely there is a better way to help everyone,” Mr. Dominguez said.

The DoF is now pushing for remaining packages of a tax reform program that was designed to shift the burden more on those who can afford to pay higher levies and to increase collections.

A massive infrastructure development drive that is supposed to increase annual overall economic growth rates to 6-7% by the time Mr. Duterte ends his six-year term in mid-2022 — from an average of 6.3% in 2010-2016 — hinges on additional revenues to be collected under the overhauled tax system.

The 17th Congress approved Republic Act No. 10963 that slashed personal income tax rates in order to give households more money to spend but either raised or added levies on several goods and services, as well as RA 11213 that will offer amnesty to tax delinquents in order to broaden the tax base. A third measure, which further increases tax rates on cigarettes to P60 per pack by 2023 from P35 currently, awaits Mr. Duterte’s signature.

First in line for the 18th Congress’s consideration is a proposal to reduce the corporate income tax (CIT) rate to 20% by 2029 from 30% currently — in order to put it at par with the rest of Southeast Asia and thus help lure more foreign direct investments — as well as another that will streamline tax incentives by scrapping those deemed redundant.

After all tax reforms hurdled the House of Representatives, Senators of the 17th Congress favored the CIT reduction but questioned the move to reduce fiscal perks, fearing that it would drive away investors and result in job losses. Also up for legislation are proposals to simplify taxes on investment instruments; centralize real property valuation and assessment; increase government share from mining revenues and excise taxes on alcohol products.

Sought for comment on the DoF proposal for more frequent interaction, Senate President Pro Tempore Ralph G. Recto said in a mobile phone message on Thursday that he was “okay with it.”

Senator Juan Edgardo M. Angara, who is being considered as Finance committee chairman, cited the need for closer executive-legislative coordination, saying in a separate text message: “Coordination is always good and goals more attainable that way, especially now that the government is playing catch-up to reach targets given the budget deadlock, which set us back a few months.”

Senate President Vicente C. Sotto III had flagged the lack of executive-legislative coordination as the root of slow reform legislation, proposing in a May 16 briefing monthly meetings of the Legislative-Executive Development Advisory Council.

Leyte 1st district Rep.-elect Ferdinand Martin G. Romualdez — a contenders for speakership in the House of the 18th Congress — welcomed DoF’s proposal.

“I fully support this proposal. I appreciate that Sec. Dominguez responded positively to my appeal about Congress and the economic managers working as a team to help President Duterte realize his vision for our people,” Mr. Romualdez said via text.

“Meeting with him two weeks ago, I relayed the congressmen’s wish to have a cohesive working relationship with the economic managers for more effective action on the President’s legislative agenda… We can do this with open communication line and closer coordination.”