THE DEBT-TO-GDP ratio is expected to remain below 47% even after government tapped more loans to help deal with the coronavirus disease 2019 (COVID-19) outbreak, Finance Secretary Carlos G. Dominguez III said.
He added that most taxes will remain relatively healthy when they eventually come in — after the lockdown disrupted tax season in April — because many of the taxes were computed against 2019 earnings, before the economy was impacted by the pandemic.
“We are looking at keeping at our debt-to-GDP ratio below 47% and so far I think we will hit that target because after all we have tax collections,” he said in a webinar organized by the Harvard Business Group Philippines.
Mr. Dominguez said while income taxes will reflect the strong economy in 2019, value-added tax (VAT) is expected to be significantly affected by the outbreak and the resulting lockdown.
The government’s economic team has prepared a P1.171 trillion package featuring social amelioration programs and well as tax and fiscal measures to help the Philippines recover from the public health emergency.
The package sets aside P830.47 billion for fiscal and monetary action, P305.218 billion for emergency support to the vulnerable sectors and P35.722 billion for medical expenses.
The economic stimulus component of the recovery program does not yet have a final funding level.
The P1.171 trillion package is equivalent to 6.3% of gross domestic product (GDP).
Mr. Dominguez has said that the Corporate Income Tax and Incentives Rationalization Act (CITIRA), if passed, can be deployed as a stimulus measure.
“You want a stimulus, it’s been sitting in Congress, pass it and you have a stimulus right away,” he said, referring to the CITIRA bill.
“I encourage (senators) to please pass the CITIRA bill because of tax incentives there that can act as stimulus to the economy,” he added.
The bill seeks to progressively reduce corporate income tax to 20% by 2029 from the current 30%. It will also rationalize fiscal incentives for investors.
The bill has been awaiting second reading in the Senate. It was certified as urgent by President Rodrigo R. Duterte, paving the way for its approval on second and third reading on the same day. — Luz Wendy T. Noble