Briones warns of debts without tax reform

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Metro Manila (CNN Philippines, July 25) — Education Secretary and former national treasurer Leonor Briones on Wednesday warned that the government will have to borrow money if the implementation of the tax reform program is stopped.

She said the administration's remaining tax packages should be passed if Congress would approve the proposed ₱3.757 trillion budget for 2019, ₱659.3 billion of which goes to the education sector.

"If Congress passes the budget but does not pass the TRAIN Law then government will have a problem because it will have to borrow," Briones said in a Malacañang press briefing.

The first package of the administration's tax reform program, passed as the Tax Reform for Acceleration and Inclusion (TRAIN) law or Republic Act No. 10963, lowered personal income tax rates but imposed excise taxes on fuel, luxury motor vehicles, and sweetened beverages.

Meanwhile, two other packages have yet to be approved by Congress: the second tax reform package which tackles corporate income tax rates and fiscal incentives and the third package which aims to lower estate and donor's taxes.

The education sector is among the key beneficiaries of revenues to be generated by the administration's TRAIN Law. Of the ₱90 billion it is expected to raise in 2018, ₱27 billion were allocated for education and health care.

"It's either taxes or borrowing. It's either taxes or no schools, hospitals, bridges, offices, and relief for our poor," Briones said.

"Suspending a revenue generator like TRAIN will do more harm than good," she said, adding that raising taxes and revenue is the best option over incurrding debts and reducing expenditures.

Briones made these statements amid calls to stop the TRAIN's implementation because of the uptick in prices. 

She said the TRAIN law should not be blamed for the rising prices as there are many other external factors that caused the inflation, such as the rise of oil prices in the world market.

President Rodrigo Duterte in his State of the Nation Address on Monday said he won't stop the tax reform program.

Budget Secretary Benjamin Diokno is confident the next two tax reform packages will hurdle Congress by yearend on the back of support from administration allies.

READ: Charter change, tax reform not included in Senate's priority agenda — majority leader  

CNN Philippines' Luchi de Guzman contributed to this report.