ASEAN KEY DESTINATIONS
No tax reform means lower GDP, ‘dark age’ of infra – NEDA's Pernia
Socioeconomic Planning Secretary Ernesto Pernia on Tuesday warned that the Philippines will have to endure lower economic output and the “dark age” of infrastructure if the Congress would not pass the proposed comprehensive tax reform program (CTRP).
The tax reform package was certified urgent by no less than President Rodrigo Duterte on Monday.
At a press briefing in Malacanang, Pernia said that the CTRP must be passed to stoke the Philippine Development Plan – an offshoot of 10-point socioeconomic agenda formulated by the economic managers at the onset of the Duterte administration last year.
It was presented by the economic team during a business forum in Davao City.
“They are really twins. Maintaining macroeconomic stability and the tax reform program are twins and they are inseparable. So that is why the President has decided to direct or to admonish Congress that it is an urgent measure,” Pernia noted.
“Our analysis at NEDA shows that with CTRP the real GDP level is higher by between 0.6 percent and 1.1 percent by 2022. Those are net increases in GDP. If without CTRP, on the other hand, the GDP level will be lower by that magnitude between 0.5 percent and 1.1 percent by 2022,” he added.
The Philippine economy grew slower than expected at 6.4 percent in the first quarter of the year, the slowest phase of growth for the gross domestic product (GDP), since it registered at 6.3 percent in the fourth quarter of 2015.
The Cabinet official emphasized the tax reform is needed to usher in the golden age of infrastructure.
“That is the problem. We will not be able to fund the Build, Build, Build. Small Build, Small Build, Small Build … Or maybe No Build, No Build, No Build,” he said.
Non-passage of the tax reform package would affect deals and aids from China and Japan, Pernia noted. “We have to go slow in accepting or entering into ODA agreements with China because we also have to balance spending, indebtedness on one hand and capacity to pay and service the debt on the other hand,” he said.
The plan is to fund the infrastructure development program with a mix of loans, tax revenue and official development assistance or ODA.
“So, instead of 10 projects, maybe just one or two. So, it’s not going to be the golden age of infrastructure, it will bet the Bronze Age maybe of infrastructure, maybe dark age of infrastructure. That is ... terrible. That is how unwelcome the non-passage of the CTRP is going to be,” he added.
Nonetheless, Pernia seemed confident that the Congress would pass the first package of the reform package before it goes on recess this week.
"Well, it doesn’t mean that it will be the end of the world if the first package is not passed before Congress goes on recess. But it should be ... it should be passed before they go on recess. And with the President’s, you know, strong message to Congress, I think it’s going to be passed," he said.--— VDS, GMA News
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