Dominguez: 5.1% GDP expansion in H2 enough to sustain 2016 growth targets

Taxpayers queue up on the last day of filing their Income Tax Returns in this April 2015 file photo. The Philippines has among the highest rates of personal income and corporate taxes, and the new administration is bent on reducing this, confident its arsenal of other tax reforms can fill in the revenue gap. It also says putting more money in people's hands will stimulate the economy. INTERAKSYON.COM means BUSINESS

MANILA - The country needs only to sustain a 5.1-percent expansion in gross domestic product (GDP) for the second semester to achieve the government's growth target of 6 to 7 percent for 2016.

This resulted from the Philippine economy's strong performance in the first two quarters, according to Finance Secretary Carlos Dominguez III.

While acknowledging that the new administration's tax reform plan could lead to a temporary erosion in revenues, Dominguez said the countermeasures to be put in place for the remainder of the year would, in the long run, pump more funds into state coffers to offset projected revenue losses.

The Duterte government's plan to cut personal and corporate income tax rates, which are among the highest in the region, is aimed at increasing tax compliance and growing a robust middle class.

“This is the 70th straight quarter growth since the Asian financial crisis, the 18th straight quarter above 5 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.

“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.

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, adding that “we have countermeasures to cover those erosions in revenue.”