The Department of Finance (DOF) admitted that raising enough money for the Duterte administration’s ambitious projects and programs is no simple task as the people have the propensity to hate taxes.

Finance Secretary Carlos G. Dominguez III said they are facing what seems like an “impossible” job of slashing personal and corporate income taxes, but at the same time raise at least P800 billion more annually for the government’s investment program.

While the local and foreign business groups; economists and fiscal policy experts; as well as multilateral development partners support the DOF’s tax reform proposals, Dominguez admitted they have yet to win the support of the masses.

“In this new administration, the Department of Finance (DOF) is tasked with what might seem like impossible goals,” the finance chief said.

Dominguez pointed out the DOF needs to impress two critical sectors, the lawmakers and the populist groups that see any new revenue measure as an opportunity for mounting street protests.

“It is a biosphere inhabited by politicians who find political profit in giving away tax exemptions of every imaginable variety, populist groups that equate every revenue measure as a form of oppression and highly talented accountants skilled in the dark arts of tax avoidance,” he said.

“It is never easy to navigate through this hostile environment,” Dominguez described.

The challenge now for the DOF is to make the masses, especially the wage earners, to understand that the Duterte administration’s comprehensive tax reform plan is crucial in attacking poverty and transforming the Philippine economy.  “We need to help the ordinary citizen understand how critical the tax reform package is to finally make the turn from exclusive to inclusive high growth rates and bring down levels of extreme poverty to the lowest levels ever,” Dominguez said.

He added “the usual excuse of legislators for not supporting tax legislation is that the amount to be collected could be raised by tightening on tax administration.”

“Anticipating that, we have tightened tax administration early on,” he said. “As much as we can, within the framework of prevailing laws, we have simplified processes and improved discipline in our main revenue agencies,” Dominguez said. Both the Bureau of Internal Revenue and the Bureau of Customs have performed well, Dominguez said, adding the government’s two main tax agencies have exceeded their targets in the fourth quarter last year.

The first tax reform bill of the DOF is still pending in the House of Representatives, nearly six months after it was submitted to the lower chamber.

Dominguez had welcomed the move by the House committee on ways and means to “approve in principle” the first phase of the Comprehensive Tax Reform Program (CTRP) before the Lenten break of the Congress.

Dominguez said the decision of the committee to pass tax reforms as a package rather than on a piecemeal basis is a step closer for the Congress to help the Duterte administration fund its ambitious agenda. He said that funding the Duterte administration’s ambitious public investment program will be done through the implementation of the tax reforms, which aim to make the current outdated tax system simpler, fairer and more efficient.

“May I also mention that we did this in record time. There’s no other administration that has submitted a tax reform program within 90 days of its assumption of office,” Dominguez said.

According to the finance chief, now is the best time to push this tax reform plan, considering that interest rates remain low enough to attract investments and a “large demographic wave of young Filipinos are about to enter the workforce.”

“There is no other way to state the urgency of passing the tax reform package at the soonest than to say we are at a Cinderella moment today,” Dominguez said.

“If we do not seize this rare opportunity to break the old cycle of high poverty, poor infrastructure and low growth, we will condemn the next generations to the past we want to leave behind,” he concluded.

Source: http://business.mb.com.ph/2017/04/12/dominguez-admits-tax-reform-tough-task-for-dof/