Finance Secretary Carlos Dominguez III said that given the Philippine economy's strong performance in the first two quarters of 2016, the country needs to sustain an above-5 percent expansion in its Gross Domestic Product (GDP) this second semester for Government to achieve its growth target of 6 to 7 percent for 2016.
While acknowledging that the new government's tax reform plan could lead to a temporary erosion in revenues, Dominguez said in a television interview that the countermeasures that would be put in place for the remainder of the year would. In the long run, pump more funds into the state coffers to offset such projected revenue loss.
The Duterte administration plans to cut personal and corporate income tax rates, which is among the highest in the region, to increase tax compliance and grow a robust middle class.
"This is the 70th straight quarter growth since the Asian financial crisis, the 18th straight quarter above five percent, and we're very happy that this growth has been strong and we foresee that it will continue to be strong through the coming years, said Dominguez on TV.
"Most likely we will hit our targets for the year. We need only to grow 5.1 percent for the next two quarters to achieve between 6 and 7 percent for the whole of 2016," he added.
Besides implementing countermeasures, Dominguez said lowering corporate income tax rates would help attract foreign investments and build capital, along with government initiatives to relax foreign ownership limits by amending the Constitution.
"We are preparing our tax reform program that will actually lower tax rates for individuals as well as corporations," he said. "However, we have countermeasures to cover those erosions in revenue, and they will certainly, we'll end up with more revenues in the long run."
To encourage investors to relocate here, Dominguez also said earlier that the government is "eyeing higher oil excise duties plus fewer Value Added Tax (VAT) exemptions, rationalizing other fiscal incentives, enhancing collection by revenue-earning agencies, and improving the ease of doing business" in the country.
With the President supporting moves to amend the Constitution, "among the items that he has put on the table are liberalizing the foreign investment laws in our country," Dominguez said.
He added: "We are looking towards increasing the amount of allowed foreign investments in nationalized industries, and we believe that will be a boost to our foreign direct investments."
The finance chief said he was "very happy with the strong numbers" reported by the National Economic and Development Authority (NEDA).
"These are the highest second-quarter and first-half numbers since 2014. We hit 7 percent for the second quarter and 6.9 percent for the first half of 2016," Dominguez noted.
Earlier, Dominguez said last quarter's 7 percent GDP growth would enable the new government to keep its growth targets on track for the rest of the year and in 2017.
Dominguez said that with the growth momentum of the Philippine economy remaining strong, the Duterte administration would build on previous efforts to effectively implement its 10-point socioeconomic agenda.
The finance secretary acknowledged the "good policies of both the Aquino and Arroyo administrations to sustain the country's strong macroeconomic fundamentals that made this growth possible."
"But we still have a big task ahead of us to lower the poverty rate that have been stuck at 26% of our population," he added.
Besides investments in infrastructure and education, Dominguez said the government will also fully implement the Reproductive Health Law to realize the government's goal of reducing the poverty rate from the current 26% to 17% by the time President Duterte steps down in 2022.
"We expect to continue this growth trajectory but with a difference from the previous admin because we will be reducing poverty rates," Dominguez said.
He said that to make growth truly inclusive, the Duterte administration would invest heavily in developing the country's human resources, to empower poor families to be active contributors in developing the economy.
According to the finance secretary, "Mr. Duterte has put in place a 10-point socioeconomic agenda on inclusive growth at the start of his presidency to fulfill his electoral mandate to spread peace and prosperity to all sectors across all regions."
"But for Government to do that, it must first sustain the growth momentum by way of a stimulus program anchored on accelerated spending on infrastructure, human capital and social protection," Dominguez said.
Source: Philippine Information Agency