1 DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. By 2022 at least - - PowerPoint PPT Presentation

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

By 2022

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3,996

USD

3,500

USD

at least

12,376

USD

3,500

USD

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Progress in achieving the 10-point socioeconomic agenda is advancing strongly.

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

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• 1. Macroeconomic policies

BB- BB BB+ BBB- BBB BBB+

Philippine credit rating

Source: S&P

Investment grade

Credit rating upgrade means upgrading everyone’s life.

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

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• 3. Ease of doing business

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

• 4. Infrastructure spending

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Farmers benefit from the Rice Competitive Enhancement Fund (RCEF) with a 10 billion peso annual appropriation for the next six years.

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Rice Competitive Enhancement Fund (RCEF)

Photo: IRRI Photo: IRRI Photo: IRRI

• 5. Rural development

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

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• 7. Human capital development

These are some of the specific benefits that Filipinos will receive under UHC if fully implemented.

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

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• 9. Social protection programs

photos from DSWD, IRRI

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Some economic priorities in next three years

• 2. Pursue the remaining tax reform packages to make the tax system simpler, fairer,

and more efficient, while ensuring sustainable financing for the infrastructure

• program. Four major packages remain:

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Package 2 Corporate income tax and incentives reform Package 3 Property valuation Package 2+ Alcohol and e-cigarette excise Package 4 Passive income and financial taxes

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Package 2 Corporate income tax and incentives reform

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Source: Asian Development Bank and PWC

The Philippines has the highest corporate income tax rate in the ASEAN region, yet it has low efficiency.

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• For instance, Thailand collects

CIT equivalent to around 4 percent of GDP on a 20 percent CIT rate, or an efficiency of 20 percent.

• Meanwhile, the Philippines

collects CIT equivalent to 3.7 percent of GDP on a 30 percent rate, or an efficiency

• f only 12.3 percent.
• Among the ASEAN5, the

county is only ahead of Indonesia in terms of efficiency.

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

The President may advance the scheduled reduction in the CIT rate when adequate savings are realized from the rationalization of fiscal incentives.

Lower corporate income tax

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

• 14 investment promotion

agencies

• 136 investment incentive

laws and 200 non- investment incentive laws

• 546 ‘ecozones’ and freeports

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We grant the most generous fiscal incentives since they are in lieu of all taxes and given forever.

Source: Individual country finance agencies and investment promotion offices.

We have a complex tax incentives system.

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

• Firms with no incentives

pay the regular rate of 30% of net taxable income

• Firms with incentives pay

between 6% and 13% effective tax

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For example, almost all of the 90,000 SMEs pay the regular 30% rate.

Source: DTI and TIMTA

Resulting in huge inequity and “wasted” incentives

(2% of 2017 GDP)

(2.8% of 2017 GDP)

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Fair and accountable tax incentives system

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Every peso granted as tax incentive is a peso off the budget that could have been spent for infrastructure, health, education, and social protection that benefit all, and not only a few.

Package 2

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Package 2+

Tobacco and alcohol excise taxes

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Ensure financial sustainability for health expenditure programs Discourage excessive alcohol, tobacco, e- cigarettes, and sweetened beverages consumption for better health and social outcomes, especially among the youth and poor Ensure a healthy, world class workforce

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Funding gap before passage of the tobacco tax bill

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Tax rates under Enrolled bill on tobacco tax

Cigarettes for pack of 20 (in pesos per pack) Heated tobacco products for pack of 20 (in pesos per pack)

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Tax rates under Enrolled bill on tobacco tax

Vapor products (in pesos)

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Fermented liquors – increase specific tax per liter (in pesos):

DOH-DOF and Sen. Pacquiao’s proposal on alcohol tax

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Current (2019) 2020 2021 2022 2023 2024

• nwards

NRP (excluding excise and VAT) per liter of volume capacity

24.4 40 45 50 55 10 percent indexation every year thereafter (60.5 in 2024)

Brewed and sold at microbreweries

• r small

establishments, regardless of the NRP

34.07

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Distilled spirits – increase ad valorem and specific tax (in pesos):

DOH-DOF and Sen. Pacquiao’s proposal on alcohol tax

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Current (2019) 2020 2021 2022 2023 2024 onwards

Ad valorem rate on net retail price (in percent)

20 25

Specific tax per proof liter (in pesos)

23.4 40 45 50 55 10 percent indexation every year thereafter (60.5 in 2024)

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Reform as bridging the future

Source: https://www.pinterest.com/explore/social-stratification/

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE.

Thank you

Photo: IRRI Photos: IIRI

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