The House of Representatives’ recent approval of the proposed 2022-2028 Medium-Term Fiscal Framework (MTFF) is a step towards following international best practices in tax policymaking.
The MTFF provides for certain fiscal and economic goals that will guide the legislative agenda of Congress.
Its framework specifically lays down the near-term socioeconomic agenda which will continue to implement risk-managed interventions in areas of food security, transport and logistics, energy, fiscal management, health, education, social protection, and bureaucratic efficiency.
Albay 2nd District Representative Joey Salceda, also the Committee on Ways and Means chair who sponsored the measure, said during the deliberations that the MTFF is “codification of the Marcos administration’s covenant with the Filipino people on key economic and fiscal objectives” and will set the tone for the upcoming budget discussions.
In a statement on Sunday, Salceda said the MTFF would ensure the unimpeded and adequate delivery of social services, mitigate inflation pressures, accelerate economic recovery, and address economic scarring.
It also aims to serve as a medium-term socio-economic agenda which will create high-quality jobs.
“The recent past and the Covid-19 pandemic have beset the macroeconomic environment with challenges and a series of external shocks. Inflation has accelerated in recent months due largely to significant increases in international prices of oil and key commodities,” stated House Concurrent Resolution No. 2 adopted on 1 August.
“Still, the economic growth momentum remains firm as demonstrated by the strong 2022 first-quarter gross domestic product (GDP) growth at 8.3 percent. However, the recovery process from the impact of the pandemic is still ongoing amid elevated uncertainty in the international economic environment,” the resolution added.
The legislative agenda shall be guided by targets set in the 2022-2028 MTFF: 6.5% to 7.5% real GDP growth in 2022; 6.5% to 8% real GDP growth annually between 2023 to 2028; 9% or a single-digit poverty rate by 2028; 3% National Government deficit to GDP ratio by 2028; less than 60% National Government debt-to-GDP ratio by 2025; and at least US$4,256 gross national income per capita to attain upper middle-income status.
The Lower House is also committed to “prioritize legislative measures that are consistent with the long-term socioeconomic vision as embodied in AmBisyon Natin 2040, as well as the 2022-2028 Medium-Term Fiscal Framework, for a prosperous society,” Salceda said.
Salceda said this would be consistent “with the achievement of macroeconomic stability and inclusive economic development while continuing to allocate resources for health, disaster risk management, food and social security, digital economy, local government support, private sector participation, and growth-inducing expenditures.”
“These are attainable goals, but we need to discuss in the budget framework how we can achieve the goals this year and every year thereafter,” he said. “We also need to raise the necessary revenues through both tax reforms, tax collection efficiency and better enforcement. The implicit assumption behind the MTFF is that by 2028, we can achieve 17.6% revenue-to-GDP.”
Salceda said he is now discussing with the economic managers the possibility of enacting tax reforms,“but deferring implementation to when we begin exceeding our pre-pandemic growth momentum.”
In his sponsorship speech, he said the MTFF is an international best practice.
“Some of our best neighbors and comparators or counterparts are already doing that. Indonesia, Thailand, and Korea have it in their statutes. Malaysia, Singapore and Japan do it regularly in their budgets,” he said. “The ultimate purpose is to touch base. This helps us find common ground and a macro-fiscal north star as we navigate the budget deliberations.”