Duterte tax seen lifting Philippine growth to 8-yr high

Philippine economic growth may accelerate to an eight-year high in 2018 as a tax plan that Congress must pass this month will boost revenue and accelerate infrastructure spending, Finance Secretary Carlos Dominguez said.Gross domestic product can reach the upper end of the government’s 7% to 8% growth target next year if President Rodrigo Duterte’s tax plan – a combination of cuts and increases – is implemented at the start of 2018, Dominguez said. The last time annual growth was above 7.5% was in 2010 and expansion last exceeded 8% in 1976.“We are investing a lot on infrastructure to create jobs and more economic activity,” Dominguez said in an interview on the sidelines of parliamentary tax debates on December 1. “That’s why we need this revenue, you can’t borrow it all.”Representatives of both chambers of Congress on Friday started meeting to reconcile their versions of the tax plan as early as this week and have the measure signed into law by Duterte before the end of the year for implementation in January. Senate Minority Floor Leader Franklin Drilon warned disagreements could delay the tax bill.The first of several tax reforms planned by Duterte’s economic team would lower personal income tax, while raising levies on oil, vehicles and sugary drinks to yield additional revenue of at least 100bn pesos ($2bn) in the first year.The Finance Department prefers the House of Representatives’ proposal on a fuel excise tax hike which sets a bigger increase in the first year. “It will allow us to invest the money sooner,” Dominguez said. Duterte’s $170bn, five-year building plan includes the capital’s first subway and 653-kilometre (405 mile) railway to the south.“Like in any business, you have your own capital,” Dominguez said on why the tax reform is crucial to infrastructure. “This is our capital. We figure we can fund about 25% of the programme and borrow the rest.”GDP growth this year will probably be near 7%, pacing the 6.9% expansion in 2016, Economic Planning Secretary Ernesto Pernia said in a speech on Saturday. Higher government spending and the implementation of big-ticket infrastructure projects should help boost growth next year, he said.