The Department of Finance (DOF) has proposed increasing the mandated dividend remittances of government-owned and controlled corporations (GOCCs) to the national treasury from the current 50 percent to at least 75 percent of their net earnings, to raise funds for future fiscal stimulus measures meant to help the country recover from the economic shock of the prolonged COVID-19 pandemic.

Finance Secretary Carlos Dominguez III broached this proposal in a letter to Speaker Lord Allan Velasco after their recent meeting to discuss funding sources for a possible third economic stimulus measure to follow the first two Bayanihan laws that President Duterte signed last year to address the coronavirus crisis.

“I agree with you that fiscal stimulus measures need to be backed up by adequate revenue sources. As mentioned, we are currently looking at the possibility of increasing the dividend rates remitted by government-owned or -controlled corporations (GOCCs) to the National Government (NG),” Dominguez said in his letter to the Speaker.

Dominguez, who heads the President’s economic team, has repeatedly pointed out the need to keep the amount of fiscal stimulus measures within levels that would keep the budget deficit manageable and not burden future generations of Filipinos with unsustainable debt servicing.

The DOF recommendations would require amending several provisions of Republic Act (RA) No. 7656 or the Dividend Law.

“We are continuously studying the matter and we will be providing you with an updated version as soon as available,” Dominguez said in his letter. “Let us continue to work together as we build back the best possible future for the Filipino people.”

Dominguez and Budget Secretary Wendel Avisado met with Velasco and other House leaders last April 8 to discuss the proposed Bayanihan 3 that was principally authored by the Speaker and Marikina Rep. Stella Luz Quimbo.

The DOF’s proposed amendments to the Dividend Law cover net earnings of GOCCs starting 2020.

Instead of imposing fines or the penalty of imprisonment for violating the provisions of the Dividend Law, the DOF also proposed that “government corporations not in compliance with the provisions of this Act as determined by the Department of Finance (DOF) shall not be entitled to any form of performance bonus or incentives.”

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