On August 9, 2018, Department of Budget and Management Secretary Benjamin Diokno presented to a large gathering of corporate finance executives details of the Duterte administration’s fiscal reforms during the 10th Annual Corporate Treasury and CFO Summit in Makati City.
In his keynote address, Secretary Diokno shared how annual cash-based appropriations can eliminate the national government’s underspending in recent years. He remarked that “the shift to a cash-based budget… will result in faster and improved delivery of public services. The one-year time horizon of budget execution will push the heads of government agencies to plan ahead, conduct early procurement, and regularly monitor implementation.”
In addition, the Secretarydiscussed the national government’s commitment to long-term fiscal sustainability. For this year, revenues are targeted to reach P2.846 trillion, 16.2% of GDP, and P3.208 trillion for 2019 or 16.5% of GDP, taking into account the additional P89.9 billion and P181.4 billion from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The Secretary also presented the Comprehensive Tax Reform Program. He remarked that “the remaining four packages will generate additional revenue streams which will be used to invest more in our massive infrastructure build-up and human capital through expanded social protection programs.”
Package 1B covers tax amnesty and adjustments in the motor vehicle user charge (MVUC) while Package 2 covers the lowering of the corporate income tax rate and the broadening of the tax base by modernizing investment tax incentives.
Package 2 plus proposes to increase the excise tax on tobacco and alcohol products and increase the government share from mining.
Meanwhile, Package 3 covers reforms in property taxation to make the valuation system more equitable, efficient, and transparent and Package 4 proposes to rationalize capital income taxation to address the multiple rates and different tax treatment and exemptions on capital income and other financial instruments.
The Secretary also took the time to discuss the details of the Budget Modernization Bill.
The 10th Corporate Treasury & CFO Summit – Philippines was hosted by the CorporateTreasurer. It is an annual forum that gathered over 400 senior corporate finance executives in the Philippines to discuss the economy and other key issues such as funding, capital management among others.