Infra spending reaches 5.5% of GDP in 2018
(The Philippine Star) – June 29, 2019 – 12:00am
MANILA, Philippines — Government investments on infrastructure reached 5.5 percent of gross domestic product (GDP) in 2018, fueled by the steady revenue stream coming from the administration’s tax reform program, according to the Department of Finance.
Citing Finance Undersecretary Gil Beltran, the DOF said public spending on infrastructure as a percentage of GDP doubled to 5.5 percent in 2018 from the average of 2.8 percent in the past 50 years.
This is also slightly higher than the infrastructure spending-to-GDP ratio of 5.4 percent recorded in the previous year, according to DOF data.
According to Beltran, the country’s level of public infrastructure spending at 2.8 percent of GDP in the past 50 years was minimal compared with the five percent average for the rest of the Association of Southeast Asian Nations (ASEAN) 5.
He said the Philippines intends to further increase its infrastructure and capital outlays to seven percent by 2022 through additional revenues from the government’s Comprehensive Tax Reform Program.
Beltran said this ensures capital accumulation, one of the two factors cited by the World Bank that are seen to help sustain the country’s high growth in the long term.
Additionally, Beltran said the government is putting in place several measures to secure total factor productivity, the other source of long-term growth cited by the World Bank.
“Fiscal policy has been the Achilles’ heel of the Philippine economy. Our past tax measures were largely passed to stave off brewing fiscal imbalances. Now that our fiscal position is in a much better footing, it is time to turn our gaze toward growth and equity,” Beltran said during the recent membership meeting of the European Chamber of Commerce in the Philippines (ECCP).
To enhance productivity, Beltran said the DOF would push for the approval of the remaining packages of the CTRP in the next Congress.
These include Package 2, which aims to lower the corporate income tax (CIT) and modernize the fiscal incentives system; Package 3, which seeks reforms in the property valuation system; and Package 4, which rationalizes capital income taxation.
“The business community is especially interested in the second package of the CTRP. For the 18th Congress, we are going to file again the bill to rationalize fiscal incentives and lower the corporate income tax. We are advocating that the granting of fiscal incentives be targeted and time-bound,” Beltran said.
He said these reforms are being laid down by the Duterte administration to provide an environment conducive for investments.
He said prudent fiscal policy and efficient tax administration play an important role in enhancing the country’s competitiveness.
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