MANILA - Education Secretary Leonor Briones on Wednesday warned that failure to pass the remaining tax reform packages may force the government to incur more debt just to fund its programs.
Briones, formerly a national treasurer, said that cutting down on expenditures is out of the question because of the “rising expectations from our people,” which is why raising government revenue through increased taxes is the preferred mode.
“The third alternative is to borrow… We don’t want to go through that horrible experience again during the 80s when we were drawn into the global debt crisis,” Briones told Palace reporters in a briefing.
Briones said shunning the TRAIN law or the Tax Reform for Acceleration and Inclusion law, the first package of which raised duties on sugar-sweetened drinks, fuel and cars, will only do more harm than good.
“It’s either taxes or borrowing. It’s either taxes or no schools, hospitals, bridges, offices, and relief for our poor,” she said.
“The government will have to borrow and interest rates will be higher,” if the succeeding train reform packages are not passed, she added.
“If Congress passes the budget but does not pass the TRAIN law then government will have a problem because it will have to borrow.”
Briones made this statement as several lawmakers have expressed apprehensions over passing the remaining tax reform packages, which critics say could result in higher consumer prices and loss of jobs.
President Rodrigo Duterte earlier urged Congress to pass the second tranche of tax reforms, aimed at rationalizing corporate taxes and incentives.
In his budget message to Congress for 2019, Duterte said TRAIN is expected to generate and additional P181.43 billion with the implementation of Package 1B, consisting of general and estate tax amnesty, adjustments in the motor vehicle user’s charge, and amendments to the Bank Secrecy Law.
Package 2+, meanwhile, aims to lower corporate income tax rate to 25 percent from the current 30 percent, and rationalize fiscal incentives.
The government wants to reduce corporate income tax to attract more investments, as the Philippines currently has one of the highest corporate income taxes in the Southeast Asian region.