Diokno to push for passage of tax packages under CTRP

FINANCE Secretary Benjamin E. Diokno vowed to push for the passage of the remaining two packages under the Duterte administration’s Comprehensive Tax Reform Program (CTRP) that failed to hurdle the legislative mill in the last Congress.

Diokno said he supports both the Real Property Valuation Reform program (Package 3) and the Passive Income and Financial Intermediary Taxation Act, or Pifita,” (Package 4) that were aimed to streamline the tax system.

“It will simplify a lot the tax system. So we will push for that. And then we expect that to be approved before the end of the year. And it will be implemented next year,” Diokno said during a Palace briefing last Wednesday.

In the 18th Congress, both packages were passed and approved on third and final reading by the House of Representatives. However, these remained pending at the committee level in the Senate.

This means that both bills would have to be re-filed again in the 19th Congress and hurdle once again the legislative mill before these can be signed into law by the President.

The Real Property Valuation Reform Bill aims to adopt internationally-accepted standards and professionalize real property valuation to promote investor confidence.

On the other hand, Pifita targets to simplify the taxation of passive income, financial services and transactions to make the Philippines competitive in attracting capital and investments needed to finance large-scale infrastructure, create jobs and boost economic growth.

In the same briefing, Diokno also reiterated he is in favor of imposing tax on digital services, which was a part of the proposed fiscal consolidation plan crafted by the Department of Finance under Diokno’s predecessor Carlos G. Dominguez III.

While Dominguez’s team proposed new taxes, among others, to reduce the country’s debt as a share of the economy, Diokno earlier said he wanted to focus on streamlining tax administration before deciding on whether the country needs new taxes as part of its fiscal consolidation program.

Despite this, Diokno said that by the end of Marcos administration’s term in 2028 the economic team aims to cut the deficit-to-GDP ratio to 3 percent, achieve upper-middle-income status and bring down poverty incidence to single-digits.

Last year, the country’s budget deficit as a share of the economy hit an unprecedented level of 8.61 percent.

Poverty incidence in the country also rose to 23.7 percent in the first semester of last year from 21.1 percent in 2018. This translated to 26.1 million poor Filipinos, a 3.9 million higher than the 22.2 million in the same period in 2018.

Former Socioeconomic Planning Secretary Karl Kendrick Chua earlier said the country remains on track to becoming an upper middle income country by next year. But local economists said the government must not be fixated with this, given the fiscal challenges confronting the incoming administration.

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