DBM confident of tax reform passage by first half of 2017

Posted on January 12, 2017

BUDGET Secretary Benjamin E. Diokno remains positive on the underlying revenue assumptions behind the 2018 budget, which will incorporate the results of reforms to the tax system, though delays raise the risk of some infrastructure projects going unfunded.

File photo of Budget Sec. Benjamin E. Diokno -- BW
“We have one whole year. We are positive that the measures will pass the first half of the year,” said Mr. Diokno last Tuesday in a chance interview.

Mr. Diokno said that the mid-year timetable is a realistic estimate for passing the tax reform program.

“If you delay to the second half, new budget plans will have to be discussed, so it has to be within the first half of the year. I think that’s realistic,” he said.

The budget for 2018 derives from the General Appropriations Act -- which was approved last month -- then finalized by mid-year before its submission to Congress for ratification.

The Department of Budget and Management (DBM) is set to propose a record P3.84 trillion budget for 2018, 14.6% more than this year’s P3.35 trillion allocation.

Mr. Diokno said that 2018 will be the year most people will see an increase in take-home pay, as reforms to the personal income tax system will already have been implemented.

The first package that the Department of Finance submitted to Congress in September is projected to generate P206.8 billion in additional revenue, or 1% of gross domestic product (GDP).

Despite having the tax reform programmed in next year’s budget, the House of Representatives has yet to approve the reforms at the committee level.

House Ways and Means Committee Chairman Dakila Carlo E. Cua has said that he hopes to pass the measure on to the Senate before Congress adjourns its session in March, as his committee will prioritize the proposal upon resumption of session next week.

The Development Budget Coordination Committee (DBCC), said recently that some infrastructure projects for 2018 will depend on the additional revenue from the tax reform.

“The projected proceeds of the tax reform package -- around P206.8 billion under Package 1 -- will fund the government’s big-ticket development projects, particularly the infrastructure program,” said the DBCC.

Finance Undersecretary Karl Kendrick T. Chua said that some of the infrastructure projects for the following year are unprogrammed, meaning the government has not found the revenue to fund them.

“In the budget there are unprogrammed funds. They can only be spent if they have the revenue. So [the infrastructure projects] will be in the budget, but they will be unprogrammed,” said Mr. Chua in a phone interview.

The DBM recently called government agencies to submit their initial budget proposals for 2018 through the two-tier budgeting approach for crafting next year’s budget allocations; the first tier being budget estimates on continuing activities, and the second accounting for new projects. -- E.J.C. Tubayan