Revenue gains from House substitute tax reform bill only P16.8 billion
May 10, 2017 at 17:00
Revenue gains from House substitute tax reform bill only P16.8 billion
The government could only raise less than a fifth of the Department of Finance’s (DOF) original revenue projection if Congress passes into law the House ways and means committee-approved tax reform measure.
Based on the DOF’s preliminary estimates submitted to the House of Representatives, the government’s potential revenues from the substitute bill of Comprehensive Tax Reform Program (CTRP) may reach only P16.8 billion.
The latest estimate, which is still subject to change, was a far cry from the P91.4 billion in revenues assumed under the Finance department’s original CTRP package one proposal.
However, the DOF is estimating that the reduction in potential revenues could be tempered should Congress decide to include other complimentary measures, like the sugar tax.
Based on the Finance department’s assumptions, the gains may reach P82.7 billion if other revenue-generating measures are included in the substitute bill.
But if Congress pushes for the tax reform’s implementation this year, the DOF warned the plan would result in a revenue loss of P51.4 billion even with the complimentary measures.
The DOF’s estimates were based on the full-year implementation of the substitute version of CTRP in 2018.
Based on the data, the current House version of the substitute bill could generate P83.8 billion in revenues in 2019, P111.7 billion the following year, P76.4 billion in 2021 and P77.3 billion in 2022.
But with the complimentary measures, the potential revenue could be higher or P147.5 billion in 2019, P179.4 billion the following year, P148.3 billion in 2021 and P153.8 billion in 2022.
Meanwhile, the committee-approved version would also raise the Duterte administration’s fiscal deficit ceiling way above the economic managers assumptions for 2018 to 2022.
Based on the DOF’s preliminary estimates, the unnumbered substitute House bill, once passed into law, would result in a higher budget deficit of around 3.7 percent to 4.1 percent, or above the Duterte administration’s 3.0 percent ceiling.
According to the DOF, the national government’s budget deficit may balloon to 4.1 percent of gross domestic product (GDP) should Congress pass its CTRP version without other complimenting revenue-generating measures.
During the House hearing on the CTRP last week, lawmakers proposed the inclusion of sugar tax in the DOF’s tax reform package one, which aims to promote health as well as boost revenue collections.
The DOF is amenable to the proposal to include House Bill No. 292 in the CTRP package one as it would generate R40 billion in fresh revenues. The measure, authored by Nueva Ecija Rep. Estrellita B. Suansing, seeks to impose an excise tax of R10 per liter on sugar-sweetened beverages.
If the House proceeds with the inclusion HB-292 in the CTRP package one, the national government’s fiscal deficit would be less, or equivalent to 3.7 percent of GDP.
