Financing economic growth

Finance Secretary Carlos “Sonny” Dominguez is the acknowledged head of the economic team of President Rodrigo Duterte. As Finance chief, Dominguez is the head of the two biggest tax collection agencies of the Philippine government, namely, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

For the first six months this year, Dominguez reported the government’s revenue generation efforts recorded a historic increase to 17.12 percent. “This is the highest first semester revenue effort ever achieved since 1946,” quoting the information furnished to him by Finance undersecretary Gil Beltran.

Similarly, Dominguez noted, the government’s tax collections grew from 14.22 percent to 15.23 percent for the same period this year. He attributed nearly half of the increase to the Tax Reform Acceleration and Inclusion (TRAIN) Law that took effect on Jan. 1 this year. However, the Finance chief hastily added that over half of the increase in tax effort is attributable to improved tax administration.  

But what seemingly got Dominguez more excited was the turnover of P30.46 billion worth of dividends from government-owned and controlled corporations (GOCCs) out of their total earnings last year. A total of 54 of the 125 GOCCs remitted dividends in 2017. Last year’s dividends totaled P30.46 billion, higher by 9.8 percent from the P27.73 billion recorded in 2016.

Dominguez along with the respective heads of these GOCCs joined President Rodrigo Duterte at Malacañang last Wednesday for a special recognition day for all of them. The Finance Department exercises fiscal oversight function of the government corporate sector. 

Eight of the GOCCs remitted at least P1 billion – the Philippine Deposit Insurance Corp. (P7.461 billion), Civil Aviation Authority of the Philippines (P5.394 billion), Development Bank of the Philippines (P2.516 billion), Manila International Airport Authority (P2.227 billion), Philippine Ports Authority (P1.956 billion), Bangko Sentral ng Pilipinas (P1.843 billion), National Power Corp. (P1.399 billion) and the Philippine Amusement and Gaming Corp. (P1.183 billion).

“It is difficult to imagine our economic achievement without the tremendous contributions of our GOCCs,” he pointed out. These dividends turned over to the National Treasury become source of additional funds to the government’s projects and programs to subsidize low cost housing, rural electrification, mass transport, public health and other basic public services.

However, taxes and non-tax revenues can never be enough to support the Philippine economy that must continue to expand and cope with our rapidly growing population.

Dominguez is leaving again on official mission on Aug. 22 going to Beijing for the regular meeting of government ministers. In his case, he will take up along with the Duterte economic team the matters on Chinese official development assistance (ODAs) to finance certain projects in the “Build, Build, Build” infrastructure program of President Duterte.

Thus, notwithstanding better revenue generation of GOCCs and higher tax collections, Dominguez disclosed they are still pushing for the passage into law of the proposed TRAIN-2. Although TRAIN-2 will impose additional excise taxes on tobacco and alcohol products as well as an increase in the government’s share from mining and a slew of reform on fiscal incentives, it also seeks to implement tax amnesty and reduction of corporate income tax.

Despite the on-going differences on the proposed 2019 cash budget system bill, Dominguez remains hopeful TRAIN-2 will be approved into law by the 17th Congress now going on its third and last regular sessions.

Before the GOCC ceremonial dividend turnover at Malacañang, Dominguez rendered a rosy report about the country’s economic picture during our Kapihan sa Manila Bay at Cafe Adriatico in Remedios Circle, Malate.

Dominguez expressed bullishness that the Philippine economy is on track with the projected growth for the rest of the year. He believes the anti-inflationary measures so far being implemented by Duterte’s fiscal and monetary authorities would mitigate the initial impact of the TRAIN-1 law.

The last time we had interaction with Dominguez was during the term of former president Fidel V. Ramos when he was then the president of the Philippine Airlines (PAL). Prior to PAL, Dominguez was the Agriculture Secretary of the late president Corazon Aquino.

When President Duterte first announced his Cabinet team in June 2016, Dominguez thus was a familiar name. But it was only last month when we saw each other again at the US embassy reception for their Independence Day held at the Makati Shangri-la Hotel.

Taking the rare opportunity of meeting Dominguez for the first time since he joined the Duterte Cabinet, I buttonholed him to be my guest at Kapihan sa Manila Bay. He readily accepted my invitation despite the busy schedule he keeps, not to mention frequent trips abroad on official mission as Finance Secretary.

So it was sort of a reunion for both of us after a long while and reminisced how we got to be friends despite the adversarial relations that media members had to observe with primary news sources like Sec. Dominguez.

Sharing vignettes with younger reporters now covering him at the Finance Department, Dominguez retraced his common bonds with me. Both of us have twin sons. Dominguez told me his twin sons are now 40 years old and have their own families already. And one of them, he added, has also twin sons.

My twin sons are just 27 years old. One is a PAL international pilot and the other is a resident doctor at St. Luke’s Medical Center in BGC. My pilot son is getting married later this year to his long-time college sweetheart who happens to have twin brothers, too. 

Now 73 years old like his former Ateneo de Davao High School classmate, Dominguez reminded President Duterte that they, too, deserve a vacation from their hard days’ work now that financing the country’s growth bear fruits for the greater number of Filipinos.