THE DEPARTMENT of Finance (DoF) is calling for the swift passage of the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability (ProGRESS) tax reform package, hoping it will be approved by Congress next year.
“We are working closely with Congress for its immediate passage as this is very important because we need to increase the disposable income of our working class given the current situation that we are in,” Finance Undersecretary Karlo Fermin S. Adriano told reporters late on Wednesday, pointing to high inflation.
“We want it as soon as possible because there’s a real need for it to be passed.”
Inflation accelerated to 7.2% in September from 6.1% in August and 1.7% a year earlier, bringing the nine-month average to 5.4%.
He noted rising prices are leaving households with less money after paying for basic needs.
“Even without the crisis, our marginal propensity to consume is around 70% more or less. That means that for every one peso in salary, on average, 70 (centavos) are being spent, and this is without any shocks,” he said.
However, he noted the ProGRESS tax reform bill filed by Albay Rep. Adrian E. Salceda is still pending at the House Ways and Means Committee.
“We’re closely coordinating with the chair of the Ways and Means (Committee). And last communication with us is by the end of the year, the bill will be passed by the Lower House,” Mr. Adriano said, referring to House Ways and Means Committee Chairman and Marikina Rep. Romero “Miro” S. Quimbo.
Under the package, the DoF has proposed tax relief measures, including raising the personal income tax exemption threshold to P350,000 and removing the minimum corporate income tax for micro and small enterprises.
The measure also seeks to hike excise taxes on sweetened beverages, tobacco, alcohol, automobiles and nonessential goods, as well as impose a new excise tax on plastics.
Once enacted, the tax reform package is expected to generate around P47 billion in additional net revenue annually, according to DoF estimates.
Mr. Adriano said there are separate bills covering parts of ProGRESS that have already been approved at the committee level, including measures raising the personal income tax exemption threshold and providing relief from the minimum corporate income tax.
He said the department opposes passing these measures separately, saying they should be enacted as a package.
“We have communicated this with the Ways and Means chair that this is a package and currently, his commitment is that he will consolidate it to become a package,” he said.
FISCAL PROGRAM
Meanwhile, Mr. Adriano said the Development Budget Coordination Committee might have to revisit its revenue targets as the ProGRESS package advances through Congress.
“In the revenue program, we will only include a specific tax bill in the revenues, if it’s in the very advanced stages, and we’re pretty sure that it will be legislated,” he said.
“In the case of ProGRESS, we’re kind of far from that process, hence it’s not yet part of the revenue program,” he added, referring to the fiscal program under the 2027 Budget of Expenditures and Sources of Financing (BESF).
Under the 2027 BESF, the government projects tax revenues to increase by 9.2% to P4.85 trillion in 2027, from the projected P4.44 trillion this year.
The government expects tax revenues to jump by another 8.5% to P5.26 trillion in 2028.
“If we see the light, yes, we will include it (ProGRESS) for 2028 BESF,” Mr. Adriano said.
Mr. Adriano said the department will continue its stakeholder consultations until next year, including one in Davao City in January.
Corruption was among the concerns raised in previous consultations. To address this, Mr. Adriano said the department has been pushing for the modernization of the Bureau of Internal Revenue and the Bureau of Customs.
“Ultimately, if you lessen human intervention, you will ultimately lessen corruption. So, we’re doing it on the DoF side, particularly with our revenue authorities,” he said.
The Philippines was embroiled last year in a corruption scandal involving nonexistent and substandard flood control projects linked to government officials, lawmakers, and contractors. The flood control mess has slowed government spending, weighed on investor and consumer confidence, and dampened economic activity. — Justine Irish D. Tabile
