Reforms urged anew by IMF

THE INTERNATIONAL Monetary Fund (IMF) has made a renewed push for legislated fiscal measures, citing the need for reforms to widen the Philippine government’s revenue base.

Shanaka Jayanath Peiris, IMF’s resident representative for the Philippines, said the passage of tax legislation, besides improving compliance through better administration, was important given the growing economy.

“The sooner, the better,” Mr. Peiris told reporters on Friday.

“The tax to GDP (gross domestic product) ratio of the Philippines is still very low compared to other countries in the same level of development, and so for the tax to GDP to increase a lot, you probably need to broaden the base not only by administration but also changes in policies.”

Mr. Peiris said policy reforms did not necessarily mean an increase in tax rates, but rather measures aimed towards bringing more people into the fold.

“Tax incentives rationalization would be important because that brings in more companies into the net. Right now, there are companies that don’t pay at all and that puts the burden on other people. It also would be a level playing field for investment and corporate governance,” he said.

“Then the Customs Modernization Act, which will also help capture the trade aspects going on … There’s also a mining tax law, which is again for the medium term, but that also could give revenues from the mineral sector, with the proper regulatory framework of responsible mining,” Mr. Peiris added.

A Finance department-backed version of the fiscal incentives rationalization bill, House Bill (HB) 2765, was filed by Rep. Gabriel Luis R. Quisumbing (6th district, Cebu) last year. It is currently pending at the committee level.

At the Senate, meanwhile, there are currently three fiscal incentives measures: Senate Bill (SB) 987 authored by Senator Ralph G. Recto; SB 35, authored by Senator Cynthia A. Villar; and SB 2048, authored by Senator Loren B. Legarda. All three have been referred to the ways and means and economic affairs committees.

As for Customs modernization, there are currently three separate proposals referred to the House ways and means committee: House Bills 5, 10 and 3339, authored by Rep. Rodolfo G. Biazon (Muntinlupa), Rep. Reynaldo V. Umali (2nd district, Oriental Mindoro) and Rep. Raneo E. Abu (2nd district, Batangas), respectively. In the Senate, SB 168, filed by Sergio R. Osmeña III, is also pending at the committee level.

Lastly, no Executive-backed version of the mining measure has been filed with Congress.

In terms of tax administration, Mr. Peiris said both the Bureau of Internal Revenue (BIR) and the Bureau of Customs were on the right track.

“We think a lot of the things that they’re doing in the BIR, especially in terms of improving the tax compliance strategies, is the right direction, especially to broaden the base of taxation …,” he said.

“Now Customs, which has been the poor performer in the past, [also] seems like it’s starting to turn a corner,” he added.

“But we do think that tax administration alone may not be enough” Mr. Peiris stressed. — Bettina Faye V. Roc, Businessworld