MANILA - The Philippines needs to reform its tax system to seize a conjunction of opportunities that will enable it to realize its potential as a "tiger" economy, Finance Secretary Carlos Dominguez said Wednesday.
Tax reform will help fund an P8-trillion infrastructure program that is expected to spur economic activity at a time when borrowing costs are low, oil prices are "benevolent," and a young population is set to join the workforce, Dominguez said.
"This is a conjuncture that allows us to join the ranks of tiger economies. We should not let this opportunity pass us," Dominguez told a tax forum.
"If we fail to reform our tax policies at this time, we will miss economic opportunities that may never converge again. If we act promptly and decisively, we will have the means to bring the next generations of Filipinos to prosperity," Dominguez said.
The House of Representatives earlier this month passed the first tranche of the reform package, which includes lowering personal income tax rates. This will be offset by higher taxes on cars, fuel and sugar-sweetened drinks.
Dominguez dismissed criticism that the package was anti-poor, saying the impoverished would benefit from increased government spending on infrastructure.
"Bad infrastructure can only contribute to economic exclusion," the finance chief said, describing tax reform as "indispensable" to Duterte's economic agenda.
The reform will shift the tax burden from the middle class to the ultra rich, who comprise around 1 percent of the population, he said.
"This reform package will end decades of unjust taxation that polarized wealth rather than distributed it. It will help build a robust middle class," he said.
The Senate will need to pass a counterpart measure within the year to meet government's target of implementing the first tranche of reforms at the start of 2018.