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PH Tax Reforms could Reduce Investment Gap

by: Sarah Joson

Friday, April 17, 2015 |

World Bank’s East Asia and Pacific Economic Update report revealed that better tax management and policy reforms could help fill the investment gap in the Philippines - not new tax rulings.

It was explained in the report that improvements in tax management could result to 3.8 percent of gross domestic product for funds over the medium term of the fiscal year to finance the investment gap. A better tax system through a more equitable, efficient, and simpler tax policy could also yield another three percent. World Bank said tax incentives have to be transparent, well communicated, targeted, performance-based, and temporary.

As of 2014, the Philippines has an investment gap equivalent to 6.8 percent of its GDP. World Bank noted that tax rates and valuations that remained unchanged alongside inflation have to be adjusted to achieve a balanced tax system.

The global financial institution also said the country needs to roll out tax reforms quickly to attain inclusive growth where people can have better jobs and the impact of social sector spending can be improved.

A 6.5-percent growth for the Philippine economy is likewise expected this year due to various government-funded programs such as infrastructure expenses, initiating key policy reforms, and implementing the Typhoon Yolanda master plan. Last year, the Philippines posted a 6.1-percent growth which is the second fastest in Asia.


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