Gov’t told: Spend taxes on necessary, well-executed projects

WHILE local business groups backed the government’s proposed tax reform program, one industry leader stressed the importance of spending funds generated from this initiative wisely.

Cebu Business Club (CBC) president Gordon Alan Joseph said he hopes the additional taxes raised for the infrastructure will be spent on projects that are necessary, well designed, and well executed.

“Too much money is wasted on projects that are unresponsive, unnecessary and poorly executed in terms of quality and construction efficiency,” he said in a text message to Cebu Daily News.

During the briefing on the proposed P3.767-trillion national budget on Wednesday, Finance Secretary Carlos Dominguez III told senators that the Duterte administration’s ambitious “Build, Build, Build” program might not be completed if Congress would not pass the proposed comprehensive tax reform program.

Dominguez said the government planned to spend over P1 trillion for infrastructure projects next year and a total of up to P9 trillion until 2022.

He added that in order to finance the higher requirement for infrastructure spending, the government would source the bulk or 80 percent of the funds locally while tapping multilateral lenders as well as development partners such as China and Japan for the rest.

The finance chief pointed out that the Tax Reform for Acceleration and Inclusion (TRAIN) would also generate additional funding for infrastructure buildup.

Dominguez earlier sought private sector support for the program to fund not only the government’s ambitious buildup plan but also other socioeconomic programs aimed at slashing poverty.

He called on businessmen to help push forward the proposed tax reforms, something which local business groups responded positively to.

But Joseph said that he also hopes to see real reform in tax collection agencies and project implementing agencies.

“We have always taken the position that if there is real reform, and the correct taxes are finally collected, there will be little need for additional taxes,” he said.

Raise revenues

Melanie Ng, Cebu Chamber of Commerce and Industry (CCCI) president, recognized that the government needed to raise enough revenues to fund its projects.

“The challenge is to raise it in an equitable manner,” she said.

She said the first package of the tax reform for acceleration and inclusion will be used for infrastructure, health, education, housing, and social protection.

“I believe the new tax reform will address the inequity, complexity, and efficiency of the tax system,” said Ng.

Dominguez said the TRAIN was very important for the “Build, Build, Build” program as only half, maybe not even half, of the proposed infrastructure projects can be funded without it.

He said that if Congress would not pass TRAIN, the initiative “will not continue as projected.”

The government intends to roll out P3.6 billion in public infrastructure projects between 2018 and 2020, as the state planning agency National Economic and Development Authority increased to 75 from 55 previously the number of so-called flagship, “game-changing” projects the administration targets to start and complete before 2022.

Under its massive “Build, Build, Build” program, the Duterte administration plans to usher in a “golden age of infrastructure.”

Senate Bill No. 1408, which Dominguez sought support for during the hearing, contains the first package of the tax reform program aimed at bringing down personal income tax rates while slapping new or additional taxes on consumption.

The bill would generate net revenues of P169 billion if implemented in 2018.