Philippine President Rodrigo Duterte’s plan to raise taxes to help fund a US$180 billion infrastructure program in faces significant delays as lawmakers worry about a backlash from voters.
Duterte’s economic team had hoped the Philippine Congress would pass the first tax package shortly after next month to raise an estimated 163 billion pesos (US$3.3 billion) per year in revenue, equal to about 1 percent of GDP.
At least two senators said they doubt that will happen.
“The tax package is a bit controversial, because they’ve included an increase of the excise tax on fuel, which will impact a lot on everyone, not just the richest of society, but also the poorest of the poor,” said Philippine Senator Juan Miguel Zubiri, who is aligned with Duterte. “That’s where the difficulty is coming into the tax reform measure.”
To help offset the impact on middle to low-income earners, the package also proposes cutting income taxes.
With only one-quarter of the Philippines linked by paved roads, leaving the rest vulnerable to heavy rains that regularly inundate parts of the country, Duterte made fixing the country’s chronic infrastructure problems a key pledge when he took office almost a year ago.
A survey by the World Economic Forum cited inadequate infrastructure supply as the second-most problematic factor for doing business in the country.
Senate Minority Floor Leader Franklin Drilon said he did not think the tax reform would be passed this year.
The bill, which the Philippine Daily Inquirer reported on Wednesday was passed by the Philippine House of Representatives’ Ways and Means Committee, would need majority approval in the lower chamber before it gets to the Senate.
“We haven’t even seen any legislation yet,” Drilon said in an interview. “I don’t think it will be possible for the administration to get it through this year in the time we have left.”
With one of the lowest tax ratios in Southeast Asia, authorities are under pressure to boost revenue to keep the budget deficit under control at 3 percent of GDP and prevent the nation’s hard-won credit rating from falling back to junk.
Any delay or attempt to water down the tax reform might not only curb the rollout of new infrastructure, but also diminish growth prospects for one of the world’s fastest expanding economies.
It is also a test of Duterte’s support almost a year after his election victory. More than 200 lawmakers from different parties in the lower house of Congress coalesced behind him to form a “super majority,” while 18 of the 24 lawmakers in the Senate are aligned with the majority bloc.
With midterm congressional elections due in May 2019, Zubiri said he was concerned by Duterte’s reluctance to take the heat off them by spending his own political capital to sell the package to voters.
Broadening the tax base demonstrated “great fiscal responsibility,” Zubiri said, but it was terrible politically.
“You want to touch it with a 10-foot pole,” he said.
“It’s not a surprise that they’re running into some kind of trouble,” Capital Economics London-based senior economist Gareth Leather said. “It’s always the case that tax rises are never going to be popular, especially if you don’t have the full blown support of the president.”
House Majority Floor Leader Rodolfo Farinas on Tuesday said in a text message that Congress did not include tax reform on a list of priority bills that could be passed before Duterte’s July state of the nation speech because there was not enough time.
The tax plan is spearheaded by Philippine Secretary of Finance Carlos Dominguez III, who has warned of risks to the nation’s investment-grade credit rating if the plan is not approved.
Duterte threw his weight behind Dominguez in March, telling lawmakers he had “promises that I must deliver.”
“Tax reform is a difficult measure,” Dominguez said in an interview in Yokohama yesterday, but added that “businesses have been quite supportive and Congress has shown they are up to the task.”
While the tax hikes and changes to various business incentives might not be popular with some sectors, Philippine Chamber of Commerce and Industry president George Barcelon said that overall his members were supporting the package.
“We are in favor of it, because if you look at spending as a percentage of GDP both in education, health services and infrastructure, we’re behind other countries,” Barcelon said in an interview. “So for us, it’s an investment.”
‘BARBAROUS ACTS’: The captain of the fishing vessel said that people in checkered clothes beat them with iron bars and that he fell unconscious for about an hour Ten Vietnamese fishers were violently robbed in the South China Sea, state media reported yesterday, with an official saying the attackers came from Chinese-flagged vessels. The men were reportedly beaten with iron bars and robbed of thousands of dollars of fish and equipment on Sunday off the Paracel Islands (Xisha Islands, 西沙群島), which Taiwan claims, as do Vietnam, China, Brunei, Malaysia and the Philippines. Vietnamese media did not identify the nationalities of the attackers, but Phung Ba Vuong, an official in central Quang Ngai province, told reporters: “They were Chinese, [the boats had] Chinese flags.” Four of the 10-man Vietnamese crew were rushed
NEW STORM: investigators dubbed the attacks on US telecoms ‘Salt Typhoon,’ after authorities earlier this year disrupted China’s ‘Flax Typhoon’ hacking group Chinese hackers accessed the networks of US broadband providers and obtained information from systems that the federal government uses for court-authorized wiretapping, the Wall Street Journal (WSJ) reported on Saturday. The networks of Verizon Communications, AT&T and Lumen Technologies, along with other telecoms, were breached by the recently discovered intrusion, the newspaper said, citing people familiar with the matter. The hackers might have held access for months to network infrastructure used by the companies to cooperate with court-authorized US requests for communications data, the report said. The hackers had also accessed other tranches of Internet traffic, it said. The Chinese Ministry of Foreign Affairs
STICKING TO DEFENSE: Despite the screening of videos in which they appeared, one of the defendants said they had no memory of the event A court trying a Frenchman charged with drugging his wife and enlisting dozens of strangers to rape her screened videos of the abuse to the public on Friday, to challenge several codefendants who denied knowing she was unconscious during their actions. The judge in the southern city of Avignon had nine videos and several photographs of the abuse of Gisele Pelicot shown in the courtroom and an adjoining public chamber, involving seven of the 50 men accused alongside her husband. Present in the courtroom herself, Gisele Pelicot looked at her telephone during the hour and a half of screenings, while her ex-husband
Scientists yesterday announced a milestone in neurobiological research with the mapping of the entire brain of an adult fruit fly, a feat that might provide insight into the brains of other organisms and even people. The research detailed more than 50 million connections between more than 139,000 neurons — brain nerve cells — in the insect, a species whose scientific name is Drosophila melanogaster and is often used in neurobiological studies. The research sought to decipher how brains are wired and the signals underlying healthy brain functions. It could also pave the way for mapping the brains of other species. “You might
RSS