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Tax reforms from the previous administration provide the government with financial room to stimulate the economy.
The previous administration’s tax measures, according to Finance Secretary Benjamin Diokno, have given the current administration the fiscal breathing room it needs to boost the capacity of the domestic sector.
Diokno stated that the government now has a better tax system as a result of the reforms made during the previous administration at the post-State of the Nation Address (SONA) economic briefing for Cabinet members at the Philippine International Convention Center (PICC) in Pasay City.
“And we’ll make the upgraded tax system even better. Therefore, that will increase our revenue, he stated.
The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which is the government’s largest stimulus program against the pandemic as it encourages more foreign investment, and the Tax Reform for Acceleration and Inclusion (TRAIN) law were two of these reforms. The former lower personal income tax (PIT) for workers in the lower income threshold, the latter provides uniform tax rates for the estate and donor’s tax, and the latter simplifies the computation of capital gains tax, among other things.
Diokno listed the right-sizing of the government as another justification for his confidence in the government’s financial flexibility.
The government will be in “far better health,” he claimed, and “can achieve much more with less” thanks to the plan.
As a result, “we will have some efficiency advantages,” he continued.
He claimed another benefit for the current administration is the existence of about 200 projects that are ready to be implemented, as opposed to the lack of them when the Duterte administration first took office.
The Public Service Act, which Diokno described as a “game-changing change” that the government may use to further support its effort to rebuild the nation’s infrastructure, was also passed into law.
“Because we believe that this is our time, the Philippine economy can develop much more quickly now than it could at earlier periods, and a stronger economy equals more future income,” he said.
Diokno claimed that because the tax reform initiatives that were implemented under the previous administration will assist increase government income, the government won’t need to borrow as much money as it did during the pandemic.
He declared that more tax reform initiatives to improve tax administration will be supported by the next administration as well.
Accordingly, he continued, “We anticipate a big increase in revenue and will simultaneously work to make government expenditure more effective.
Diokno responded, “Not necessarily, but it will (put in) greater efficiency in government expenditure,” when asked if these actions would be sufficient to close the budget gap.
The right-sizing law and the budget modernization act are among the most important legislative measures that the present administration will push, according to Budget and Management Secretary Amenah Pangandaman.
She argued that by having “an agile, efficient, responsive, and technology-driven staff,” the right-sizing measure will help the bureaucracy.
So, there won’t be a large-scale layoff of government employees. Providing for the needs of the people is really becoming more effective, she remarked at the same economic briefing.
The budget modernization system, according to Pangandaman, “will instill or improve fiscal responsibility among our government personnel.”
“We will allocate and use our limited resources to finance our top projects and programs. Every peso from our GAA (General Appropriations Act) would be used wisely and promptly, she continued.