MANILA (Reuters) - The lower house of Congress in the Philippines passed a much-anticipated tax reform bill on Wednesday, aimed at generating revenue to fund a multi-billion dollar infrastructure program key to the government’s economic agenda.
The bill, yet to be published and which still needs Senate approval, is expected to be a leaner version of an initial draft that drew opposition from some lawmakers to measures deemed to burden low-income families.
The tax reform measure is critical to President Rodrigo Duterte’s economic program, which focuses on infrastructure spending and fiscal efficiency to lift growth to as much as 8 percent before his six-year term ends in 2022.
Duterte, whose 11-month presidency has been defined by a bloody anti-narcotics campaign, threw his weight behind the tax bill and urged Congress on Monday to immediately approve and support his plans.
The expected revenues from the bill, which cut the personal income tax rate, expanded the value-added tax base, raised excise taxes on fuel and automobiles, and slapped levies on sugar-sweetened beverages, were expected to fall short of the 162 billion pesos ($3.26 billion) the government sought.
“The department of finance is very happy with the turnout,” assistant finance secretary Paola Alvarez told Reuters.
“We are hoping the Senate will also support the president’s bill that will be the foundation of this administration’s socio-economic agenda.”
Duterte enjoys a clear majority in the House of Representatives and in the Senate. The bill was approved by 246 of the 256 congressmen who voted.
Duterte’s economic managers have targeted infrastructure spending of 5.4 percent of GDP this year, rising to 7.4 percent of GDP by 2022.
They are pinning growth plans on infrastructure projects to create jobs, stimulate the economy and attract foreign investors put off by high power prices and transport bottlenecks that eat into profits.
The Philippines received a record $7.93 billion in net foreign direct investment last year, but that figure pales in comparison with regional peers, such as Malaysia’s $12.6 billion and Singapore’s $61.6 billion.
($1=49.7360 Philippine pesos)
Reporting by Karen Lema; Editing by Clarence Fernandez