Tax reforms helped PH weather economic impacts of the pandemic
The tax reforms implemented during the Duterte administration had not only boosted the Philippines’ position in the Asian region but also gave it enough capacity to survive the COVID-19 pandemic.
According to Department of Finance (DOF) Secretary Carlos Dominguez, “had we not pursued them on time, the impact of the pandemic would have been worse. Our 2020 GDP (gross domestic product) would have plunged deeper by 13.3% instead of 9.6%…”
The reforms that Dominguez is alluding to include the Tax Reform for Acceleration and Inclusion (TRAIN) Act, Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, and recent amendments to the Retail Trade Liberalization Act (RTLA), Public Service Act (PSA), and Foreign Investment Act (FIA).
The DOF chief said that these tax reforms allowed the government to increase revenues and implement more needed infrastructure and social protection programs.
“All in all, TRAIN and the other enacted packages of the tax reform program enabled the government to raise PHP504.6 billion in incremental revenues during the first four years of implementation,” he said.
And while government debt increased during the pandemic, resulting in the rise of the deficit to GDP ratio from 3.4% in 2019 to 7.6% in 2020 and 8.6% in 2021, Dominguez disclosed that they already have a “clear strategy for financing our deficit.”
He added that they are expecting deficit and borrowings to decline this year as the Philippine economy recovers.
“Our risk management strategy culminated in full-year growth of 5.6% in 2021, exceeding target and market expectations. This year, we expect our economy to grow by 7-9 per cent,” concluded Dominguez.
