Finance Secretary Carlos Dominguez III said the Duterte administration is doing “the right things at the right time” in taking full advantage of the country’s demographic strengths and the opportunities offered by the global economy to achieve its goal of building a strong, inclusive society that will benefit all Filipinos.

Dominguez said benign interest rates, low oil prices, positive credit ratings and a young workforce, along with a Comprehensive Tax Reform Program (CTRP) that will provide government a steady revenue flow will help sustain robust economic growth beyond the medium term.

He said at the Colliers Investment Conference that the massive infrastructure buildup the Duterte administration has rolled out will not only involve “large showcase projects” but also means irrigating 1.3 million hectares of farm land, upgrading the country’s rural road systems, and building better schools and better facilities for farmers to access markets.

“I hope you share our optimism about Philippine growth prospects in the near and medium term. We are doing the right things at the right time to take fullest advantage of our demographic strengths and the opportunities offered by the global economy,” Dominguez said at the event held recently at the Dusit Thani hotel in Makati City.

“In the enterprise of building a strong and inclusive economy, I look forward to committed partnership from the investment community. Together, we will build a great nation,” he added.

In a May 2017 report, Colliers International, a leading global real estate services company, said it sees “the Philippines’ long-term economic growth being anchored on increased infrastructure spending.”

Excerpts from the report read: “Moving forward, developers should take advantage of the pledged ‘golden age of infrastructure’ by pursuing strategic landbanking outside of Metro Manila. Overall, key macroeconomic indicators point to a relatively stable growth over the next 12 to 18 months and these should provide trickle-down benefits to major sectors of the economy, including property.”

Dominguez said that to help fund the government’s ambitious infra program, the Duterte administration introduced not only reforms in tax policy via the CTRP, but also significant improvements in tax administration as demonstrated by the impending collection by the Bureau of Internal Revenue (BIR) of a total of P30 billion from local cigarette manufacturer Mighty Corporation.

The BIR has filed three cases before the Department of Justice (DOJ) againstMighty Corp., which subsequently offered to settle its tax liabilities for P25 billion and shut down its business altogether. The BIR’s complaints have to dowith Mighty’s non-payment of excise taxes on its cigarettes and possession of fake tax stamps.

Mighty, which is selling its assets to Japan Tobacco International (JTI), has made an initial deposit of P3.44 billion last July 20, representing the first tranche of its tax settlement.

Dominguez said the government’s total tax take from the settlement will reach P30 billion because an additional P5 billion in value-added tax will be collected from the sale of Mighty’s assets to JTI.

In his second State of the Nation Address (SONA) , President Duterte directed the Department of Finance (DOF) and the BIR to accept the settlement, but stressed that it does not preclude any criminal charges that the government may file against Mighty Corp.

Mr. Duterte said in his SONA this “windfall for the government” is significant, because it has to face the unexpected costs of rebuilding conflict-hit Marawi in Lanao del Sur and earthquake-damaged Ormoc in Leyte.

Dominguez described the Mighty settlement as “the largest sum of taxes collected from a single taxpayer in Philippine history.”

The finance chief said, though, that “this will not be the last” as he warned non-compliant taxpayers that the government will accord them “special treatment” to compel them to pay the correct amount of taxes.

He reiterated that the date of full collection from Mighty will depend on how fast the Philippine Competition Commission can approve the sale of Mighty’s assets to JTI.

“We expect an increased collection from the tobacco industry of between P1 billion and P1.5 billion a month. We expect, and have good reason to expect, that Japan Tobacco will pay all its taxes, since 33 percent of that company is owned by the Ministry of Finance of Japan. After the settlement, Mighty exits as a cigarette manufacturer. The increase in excise tax collections will fund better health care for our people,” Dominguez said in his speech at the Collier’s event.

As for tax policy reforms, Dominguez said the additional revenues from the CTRP will “fund an ambitious infra program and more extensive social services such as health care, and better education.”

“Both the reforms in tax policy and the infrastructure program should combine to spur a higher growth rate that will dramatically bring down poverty incidence,” he said.

The Duterte administration’s goals are to sustain the country’s growth momentum and reduce poverty incidence from the current 21.6 percent to 14 percent by 2022, by which time it envisions the country to be a high-middle income economy and, later, a high-income one by 2040.

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