THE Foundation for Economic Freedom (FEF) said the Senate should review its version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill, the projected revenue for which will be inadequate for the government’s infrastructure program.

Expected revenue is “less than the overall goal to raise around P134 billion” and “will barely cover the estimated cost of the government’s public service programs and the requirements of the Build, Build, Build program,” the FEF said in a statement.

Revenue generated by TRAIN “will be used to [finance] the government’s key programs in infrastructure, education, and health while improving social protection programs to mitigate the adverse effects of higher consumption taxes,” FEF said, adding that the government also faces “new spending mandated by Congress such as free tuition in state universities and colleges, free irrigation, and increases in social pension benefits.”

The Department of Finance (DoF) has estimated that in 2018, the Senate version of the bill will generate P59.9 billion, half of the P119.4 billion estimated to be generated by the House’s version.

The FEF, whose members include technocrats from previous governments, noted that the expected revenue from fuel tax under the Senate bill, which is expected to hit P40 billion, is “insufficient to finance the targeted cash transfers and public utility vehicle (PUV) modernization programs.”

“The Senate bill’s lower fuel tax at P1.75 per liter versus the House-approved P3.00 per liter, understandably looks more favorable to the poor. However, this would translate to a corresponding reduction of revenue, from P73 billion (House) to P40 billion (Senate),” FEF said.

The group proposes a “P3-P2-P1 yearly increase in the fuel excise tax starting 2018” to ensure the revenue needed to fund the programs are generated.

Moreover, according to FEF, the Senate should also review the Valude-Added Tax (VAT) exemptions in its bill, noting that only 37 exemptions have been repealed out of 70 as suggested by the DoF.

FEF said that the repealed VAT exemptions in the Senate bill are expected to generate P10 billion only “versus the estimated P61 billion if all 70 lines of exemptions are repealed.”

Asked for comment, the chairman of the ways and means committee, Sen. Juan Edgardo M. Angara said in a text message that he has not yet seen FEF’s proposal.

“We have a lot of amendments after the interpellations and listening to the public comment on initial report that will raise the revenue take up by upwards of P30 billion, so that may be received favorably,” Mr. Angara said.

Mr. Angara added that the Senate version “after the period of amendments” will “approach” the House’s revenue generation estimate of P119 billion. – Arjay L. Balinbin

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