The Tax Reform Program Impact on the People and the Economy 1 with the 99: A Forum on Tax Reform July 5, 2017 ROSEMARIE G. EDILLON Undersecretary National Development Office-Policy and Planning
NEDA is 1 with the 99
“In 2040, we will all enjoy a stable and comfortable lifestyle, secure in the knowledge that we have enough for our daily needs and unexpected expenses, that we can plan and prepare for our own and our children’s future. Our family lives together in a place of our own, and we have the freedom to go where we desire, protected and enabled by a clean, efficient, and fair government." AmBisyon Natin 2040 3
From vision to action Long-term Developmental Goals By 2040, Philippines will be a • prosperous, • predominantly middle-class society 2035- • where no one is poor; 2040 2029- Our peoples will 2034 • live long and healthy lives, 2023- • be smart and innovative and 2028 • live in a high-trust society 2017- 2022 4
Competitive Enterprises Needed Agriculture Housing and Urban Development Countryside Development Manufacturing Tourism & Allied Services Financial Services Education services Transport and Communication Health services 5
More and Better In Infrastructure 6
Adequate (qualit ity, , quantity, affordabili lity) Socia ial Services 7
PDP 2017-2022 Overall Strategic Framework MATATAG, MAGINHAWA AT PANATAG NA BUHAY 2040 TO LAY DOWN THE FOUNDATION FOR INCLUSIVE GROWTH, A HIGH-TRUST AND RESILIENT 2022 SOCIETY, AND A GLOBALLY-COMPETITIVE KNOWLEDGE ECONOMY “MALASAKIT” “PAGBABAGO” “PATULOY NA PAG - UNLAD” ENHANCING THE SOCIAL FABRIC REDUCING INEQUALITY INCREASING GROWTH POTENTIAL Ensure people-centered, clean, Expand Increase access Advance Stimulate and efficient governance economic to economic technology innovation opportunities opportunities adoption IMPLEMENT STRATEGIC TRADE AND FISCAL POLICY, MAINTAIN MACROECONOMIC Pursue swift and fair administration of justice STABILITY, AND PROMOTE COMPETITION Promote Philippine culture Accelerate Reduce vulnerability Reach for demographic and awareness human capital of individuals dividend development Ensure peace and security Accelerate strategic Ensure safety and build Ensure ecological integrity, infrastructure development resilience clean and healthy environment 7/5/2017
PDP 2017-2022 Targets Target by Indicator Baseline 2022 Per capita income (US$ PPP, Atlas Method) 3,550 (2015) 5,000 Human development index Medium level High level Poverty incidence in rural areas (%) 30 (2015) 20 Poverty incidence overall (%) 21.6 (2015) 13-15 Subsistence incidence (%) 8.1 (2015) 5 Unemployment rate (%) 5.5 (2016) 3-5 Youth unemployment rate (%) 11 (2016) 8 Underemployment rate in AONCR (%) 19.7 (2016) 16-18 9
Tax Reform Program • Simpler, fairer and more efficient tax system ✓ Progressive income tax schedule ✓ Corrects horizontal and vertical inequities ✓ Lower personal income tax rates and broader base • Provides additional revenues • Sustainable source of financing for public infrastructure and social services
Top Tax Base in selected ASEAN countries Country Individual Top Tax Rate Top Tax Bracket (in US Dollars)a/ Singapore 22 231,481.5 Malaysia 28 232,700.0 Indonesia 30 35,000.0 Philippines 32 10,000.0 Thailand 35 146,995.0 a / Converted using the prevailing exchange rate (National Currency/US$) as of July 3, 2017 Source: Worldbank for the GDP per capita and KPMG database (https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual- income-tax-rates-table.html)
Tax Reform will support th the achievement of f th the Ambisyon 2040-Philippine Development Pla lan Goals and Str trategies. Industry & Services Connectivity/Logistics Housing/urban Dev’t . Education/ Skills Dev’t . Agriculture Dev’t . Financial Inclusion Medical/Social Services
BUILD! BUILD! BUILD!
Adequate (qualit ity, , quantity, affordabili lity) Socia ial Services 14
Share of Fuel for Personal Transportation Expenditure to Total Expenditure, Per Decile Tenth decile 2.75 Ninth decile 1.60 Eighth decile 1.27 Seventh decile 1.16 Sixth decile 1.05 Fifth decile 1.01 Fourth decile 1.02 Third decile 0.81 Second decile 0.57 First decile 0.31 Total 1.62 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Share of Fuel for Personal Tranpo to Total Expenditure, in percent Source: PSA 2015 Family Income Expenditure Survey, NEDA Staff Estimates
Share of Softdrink Expenditure to Total Expenditure Per Decile Tenth decile 0.26 Ninth decile 0.36 Eighth decile 0.41 Seventh decile 0.45 Sixth decile 0.47 Fifth decile 0.49 Fourth decile 0.48 Third decile 0.50 Second decile 0.46 First decile 0.41 Total 0.38 0.00 0.10 0.20 0.30 0.40 0.50 0.60 Share of Softdrink Expenditure to Total Expenditure, in percent Source: PSA 2015 Family Income Expenditure Survey, NEDA Staff Estimates
Mit itigating Measures Targeted Transfers • Targeted cash transfers (subsidy for the poor and vulnerable) • Pantawid Pasada (subsidy for PUVs) • Pantawid Kuryente (subsidy for SPUG areas) • PUV Modernization Program • Social welfare card/national ID
NEDA is 1 with the 99
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