50331-001: Strengthening Tax and Fiscal Policy Capacity for Inclusive Growth | Asian Development Bank

Philippines: Strengthening Tax and Fiscal Policy Capacity for Inclusive Growth

Sovereign (Public) Project | 50331-001 Status: Active

The proposed technical assistance (TA) supports the Department of Finance (DOF) of the Philippines to develop sound tax and fiscal policy through policy-oriented analysis and communication of fiscal and economic policy priorities with stakeholders.

The TA will support the development of the strategy, economics, and results group''s (SERG) policy and advisory role and, in particular, enhance SERG''s capacity under the DOF. To develop sound tax and fiscal policy through policy-oriented analysis and communicating fiscal and economic policy priorities with stakeholders, SERG requires ADB''s support in (i) providing technical advice on the design of priority reforms, (ii) enhancing quantitative and qualitative analytical research skills for policy reform, and (iii) communicating policy reform agenda and research outputs to stakeholders.

Project Details

Project Officer
Chongvilaivan, Aekapol Southeast Asia Department Request for information
Country
  • Philippines
Modality
  • Technical Assistance
Sector
  • Public sector management
 
Project Name Strengthening Tax and Fiscal Policy Capacity for Inclusive Growth
Project Number 50331-001
Country Philippines
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9250-PHI: Strengthening Tax and Fiscal Policy Capacity for Inclusive Growth
Technical Assistance Special Fund US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Public sector management / Economic affairs management - Public expenditure and fiscal management

Gender Equity and Mainstreaming Some gender elements
Description

The proposed technical assistance (TA) supports the Department of Finance (DOF) of the Philippines to develop sound tax and fiscal policy through policy-oriented analysis and communication of fiscal and economic policy priorities with stakeholders.

The TA will support the development of the strategy, economics, and results group''s (SERG) policy and advisory role and, in particular, enhance SERG''s capacity under the DOF. To develop sound tax and fiscal policy through policy-oriented analysis and communicating fiscal and economic policy priorities with stakeholders, SERG requires ADB''s support in (i) providing technical advice on the design of priority reforms, (ii) enhancing quantitative and qualitative analytical research skills for policy reform, and (iii) communicating policy reform agenda and research outputs to stakeholders.

Project Rationale and Linkage to Country/Regional Strategy

Public spending levels on public services such as infrastructure, education, and health are critically dependent on sufficient tax revenues, fiscal space, and adequate budget execution. Low government spending on basic infrastructure and social services, either because of low tax or slow budget execution, causes poor economic and social outcomes and a higher burden for the population especially those in low-income groups who must spend for what the government should have provided. According to the Global Competitiveness Report 2015 -2016, tax regulations complexity was ranked fourth among the most problematic factors for doing business, and tax rates were ranked fifth, following inefficient bureaucracy (first), inadequate infrastructure (second), and corruption (third). This implies limited tax capacity, coupled with the lack of indexation and tax rationalization, is a factor in constraining the country''s competitiveness and further growth. More effective tax and fiscal policy reforms such as an expanded tax base are needed to support government expenditure conducive to poverty reduction programs and inclusive growth while maintaining public spending and debt at sustainable levels.

To meet the ever-increasing demand for investment in infrastructure and social services, the Ten-Point Socioeconomic Agenda rolled out by the current government identified tax reform to institute a more progressive, equitable, efficient, and simple tax system among its policy priorities. It also underscored the need to make the tax system competitive relative to neighboring countries. Tax measures being proposed to Congress include (i) lower individual and corporate income taxes, (ii) expansion of value-added tax base, (iii) indexation of oil excise tax to inflation, and (iv) rationalization of fiscal incentives to investors. Other tax measures being considered pertain to reforming property taxes and imposing taxes on luxury goods (e.g., automobiles, yachts, and jewelry) and sugary products. On the fiscal policy, the government is expected to increase infrastructure investment to 7.0% of GDP by 2022, raising the budget deficit to 3.0% of GDP from the 2015 level of 0.9% while mobilizing additional revenues to finance increased spending. To develop the tax package and further fiscal consolidation measures, rigorous economic and welfare analysis is needed. This will provide an evidence-based case for the tax reform package and planned fiscal policy. There is also a need for stakeholders to understand the impacts of implementing the government-proposed tax measures. The analysis will help ensure tax reform and fiscal policy are effective, objective, and pro-poor, ultimately ushering in investment, job generation, poverty reduction, and inclusive growth.

Recognizing the need for careful, yet determined, policy-making and implementation, the DOF has proposed the creation of the SERG, a full-time delivery group within the DOF reporting directly to the secretary of finance and concurrently chair of the Cabinet Economic Development Cluster (CEDC), which, in turn, reports to the cabinet members and Presidential Management Staff. The SERG is mandated to provide strategic advice on tax, fiscal policy, and other priority reforms; conduct policy analysis to support the case for these reforms; and manage or coordinate these reforms to improve the standard of living in the country, especially for the poor and marginalized. As a tax and fiscal policy unit dedicated to the CEDC, the SERG will enable the government to take decisive actions that are timely, of high quality, and evidence based, and to effectively and objectively communicate the reform and policy with stakeholders. Therefore, the establishment of SERG is the DOF''s critical step to facilitate the government's planned tax reform and fiscal policy as well as other socioeconomic agenda.

Impact Tax revenues increased to 15.6% of GDP
Project Outcome
Description of Outcome SERG capacity for tax and fiscal policy to recommend policies and reforms strengthened
Progress Toward Outcome Technical advice from tax legal and media/public communications experts have supported the Department of Finance (DOF) in rolling out Package 1 of the comprehensive tax reform program dubbed as Tax Reform for Acceleration and Inclusion (TRAIN). The proposed reform has been communicated with stakeholders including legislators, government agencies, civil society organizations, private sector and the general public. The bill on Package 1 has been passed by the House of Representatives last May 2017, and it is currently under Senate deliberation. It is likely to enacted into law in late 2017. Four more tax packages are being formulated under the TRAIN, along with communications programs for public awareness and engagement.
Implementation Progress
Description of Project Outputs

Technical advice on the design of priority reforms provided

Quantitative and qualitative research skills for policy reform enhanced

Policy reform agenda and research outputs communicated with/circulated to key stakeholders

Status of Implementation Progress (Outputs, Activities, and Issues)

Several experts on tax, fiscal, finance and economic policies have been engaged to work with the DOF in the formulation of different tax reform packages under TRAIN.

Consultants specializing in media and communication campaigns have also been engaged to strengthen reform advocacy and stakeholder engagement.

Seminars and trainings for DOF technical staff have been carried out, covering areas such as quantitative research methods, welfare analyses, and comparative tax policy and administration among different countries.

Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Chongvilaivan, Aekapol
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Philippines Country Office
Executing Agencies
Department of Finance
DOF Building
Bangko Sentral ng Pilipinas Complex
Roxas Blvd., Manila, Philippines
Timetable
Concept Clearance 23 Nov 2016
Fact Finding 06 Oct 2016 to 11 Nov 2016
MRM -
Approval 29 Nov 2016
Last Review Mission -
Last PDS Update 27 Sep 2017

TA 9250-PHI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Nov 2016 16 Dec 2016 16 Dec 2016 31 Dec 2019 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
2,000,000.00 0.00 0.00 0.00 0.00 0.00 2,000,000.00 29 Nov 2016 644,413.08

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Government Liaison Coordinator Individual - Consulting Active 16 Feb 2018 22 Feb 2018
Economist Individual - Consulting Active 20 Oct 2017 26 Oct 2017
Process Management and Information Technology Expert Individual - Consulting Active 20 Oct 2017 26 Oct 2017
Policy Communications Coordinator Individual - Consulting Active 31 Aug 2017 06 Sep 2017
Research Project Assistant Individual - Consulting Closed 01 Aug 2017 07 Aug 2017
Econometrician Individual - Consulting Closed 29 Jul 2017 04 Aug 2017
Lead Tax and Legal Expert Individual - Consulting Closed 29 Jul 2017 04 Aug 2017
Tax Legal Research Coordinator Individual - Consulting Closed 29 Jul 2017 04 Aug 2017
Tax Legal Research Coordinator (Capital Gains & Financial Intermediaries) Individual - Consulting Closed 29 Jul 2017 09 Aug 2017
Fiscal Policy and Financial Economics Expert Individual - Consulting Closed 29 Jul 2017 04 Aug 2017
Cash Transfer Expert Individual - Consulting Closed 12 Jul 2017 18 Jul 2017
Civil Society Coordinator Individual - Consulting Closed 08 Jul 2017 14 Jul 2017
Media Coordinator Individual - Consulting Closed 08 Jul 2017 14 Jul 2017
Government Networker Individual - Consulting Closed 08 Jul 2017 14 Jul 2017
Researcher Individual - Consulting Closed 08 Jul 2017 14 Jul 2017

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Policy and Advisory Technical Assistance 9250 04 Apr 2017 Philippine Survey and Research Center, Inc. (Philippines) 10/F OMM-Citra Bldg., San Miguel Ave., Ortigas Center, Pasig, Philippines, NCR 1605, Philippines Department of Finance 133225
Policy and Advisory Technical Assistance 9250 04 Apr 2017 Philippine Survey And Research Center, Inc.(Philippines) 10/F Omm-Citra Bldg., San Miguel Ave., O Ter Pasig, Philippines, Ncr 1605 Philipp Ministry of Road and Transportation 133225
Policy and Advisory Technical Assistance 9250 28 Mar 2017 LouderPH, Inc. (Philippines) 017 Upper Ground Floor,, Worldwide Corpo R, Shaw Blvd,, Barangay Highway Hills Ma Metro Manila 1550 Philippines Department of Finance 119192

Procurement Plan

None currently available.